New beginning for your finances

culled from:bankingsense.com

The year 2015 is around the corner and many have started preparing for the New Year. Any serious organisation would have wrapped up, or is in the process of wrapping up their 2015 business plan and budget. Beyond financial projections, they have a resource backed plans to support those projections. Having excellent financial goals for next year, but like castles in the air, they need foundations under them to become real.
As an observer of human behaviour, I find it interesting that companies envision their future and go to work while most individuals look for a way to predict the future they are not ready for. We get excited if we come across someone who claims to see into our future. Many have fallen into the hands of prophets, seers, marabouts, and imams, who have cashed into our fascination about the future to smile to the bank. While organisations predict their future by creating it, we look for our future to come to us.
Studies show that the top two things when it comes to New Year resolutions is weight loss and improving personal finances. Both have something in common, as in most other areas of life – you have inner work to do to make it happen. There is nothing wrong with your New Year’s resolution. The issue is that there is a mismatch between the price you are willing to pay and the full price required, and unlike some other merchandise, you cannot have it until you have paid the full price. There is nothing wrong with setting a goal to buy a Range Rover Evoque next year. It is doable. People are doing it. The snag is, you need to be willing to put down something in the range of N35m. If all you can come up with, or are willing to spend is N6m, then the amount you have is unrealistic. There is nothing like an unrealistic goal. What is unrealistic is the price you are willing to pay. If you are not ready to step up your game, then forget about that goal.
What price are you willing to pay?
Your current reality is a reflection of the price you have paid so far. Your current money management skill is a reflection of what you have learned and practiced regarding money. If you desire to step up, then you need to pay the price to upgrade yourself. Change happens when you change. If you do not change, you will not be able to sustain new habits. The main reason most New Year’s resolution lose steam is because the old you is trying to achieve new things, same as a JS1 student trying to do home work meant for an SS2 student. You cannot carry out that load because you have not developed the capacity required. Rather than try to carry a bigger load, your energy is best invested in building your capacity. Changing on the inside builds your capacity. That is why continuous learning and development that brings about change is crucial to progress. When you stop learning, you stop growing.
If you truly want a new beginning for your finances in 2015, you need to be ready to pay the price to learn what needs to change, and then do it. There are no quick fixes or silver bullet. In an era when packaged take-aways have become the norm, we are no longer disposed to do the work we need to do to get the result we desire. We look for short cuts. We look for someone who has done their work to tell us what to do.
There is no alternative to financial education, if you want to make sustainable progress financially. Experts recommend we spend at least three per cent of our income on personal development. This includes financial education. We ought to spend more on books, tapes, seminars etc that we do on fashion or phones etc. Change starts on the inside. If you do not change your input, your output will not change. What price are you willing to pay to turn your finances around? What change do you desire? Where are you now? Where do you want to be next year?
Bring an end to financial struggle
We naturally assume we know what we are doing, and our way is the only way. We cannot use the same method that got us into trouble to get out of it. We have to be willing to be open to other ways. When you decide to change the way you handle money, and follow the correct principles, you will start to see changes. You cannot get away with impunity when it comes to natural laws.
Financial illiteracy is the root of financial struggles. When you don’t know the difference between assets and liabilities, you acquire liabilities thinking they are assets and sentence yourself to a lifetime of financial struggle. Conventionally, an asset is a tangible or intangible item that has value, something you can cash in. The financially literate do not look at it that way. They look at current cash flow. Potential cash flow is wonderful, but it does not put food on the table or pay your bills.
An asset puts money in your pocket while a liability takes money away from your pocket. What determines whether an item is an asset or liability is the direction of cash flow, not the item itself. In how many ways does money enter your pocket? Does it enter one way and flee seven ways? If you study your expenditure pattern, how much of your income goes into acquiring assets?
Most people consider their home is an asset. One of their biggest goals in life is to own a home. Due to this mindset, a lot of people sink their life savings in building a home. This often becomes an abandoned project, leaving life savings in a limbo. Sadly, many die leaving behind the project for their children to decide what to do with it.
Whether you have completed your home and live in it or not, your home is not an asset until it puts money in your pocket. Same goes for your car, boat, golf clubs, curved TV, iphone 6 etc. If you could only delay gratification first, build assets and use the cash flow from the assets to pay for your liabilities. If money keeps leaving your hands and does not come back, you will end up a poor man.
If you want 2015 to be different, you need the miracle of repentance from your financial sins and turning a new leaf. 2015 will become what you make of it. As the saying goes, you have the knife and the yam. How you cut it is up to you.