If you’re reading this article, chances are that you’re currently broke. Although nothing is bad about having no penny, you just got to know how to fix it. So in this article, I will cover 3 ways to completely leakproof your finances and avoid being broke unnecessarily in 2020.
3 Ways To Avoid Getting Broke Unnecessarily
1. The first step is understanding the number one rule of personal finance. This rule states that “Spend less than you earn and invest the rest.”
Quite a simple rule but a lot of people find it difficult to follow it. This is simply because a most people focus on the mathematical side of the rule, not know it’s more of psychological i.e your habit.
Most people think spending less than you earn is a matter of knowing what you earn as salary and spending below it. This is wrong. I think it has to do more with your spending habit. You can always justify why you should make a payment but can you also tell yourself the real truth that you don’t necessarily need what you’re paying for. I doubt if most people can do so.
2. Let your money work for you.
If you really want to avoid getting broke frequently then you’ve got to to know how to invest, i.e the act of making your money work for you.
It’s all about putting your money into assets that can generate revenue even when you’re asleep. You can decide to put your money in stocks, cryptocurrency, bonds or real estate. Any of these asset class would yield continuous return if you get the right education about it.
Why is it hard for people to follow these two rules
The major reason why people find it hard to follow this basic rule of personal finance is that common sense is not common practice.
Simply because you know something is right doesn’t mean you will do it. Some people just build a lot of resistance to avoid taking the first step eg getting heavily in bad debt.
You see, if you borrow money from Banks and what you used the money for isn’t generating you cash flow or capital gains, you’re simply working for the Banks without being employed. You would hardly have any savings talk less of investment.
In addition, if you can’t afford twice the price of a good or commodities.l, don’t buy it. Keep saving and earning more money until you can afford it. You are not in competition with anyone.
The bottom line is that staying broke is more of an habit than actual mathematics in your spending. You have got to discipline yourself to never spend above what you earn, then you put the rest of your money into investment.
I hope you have learnt something new today.
Stay positive and keep learning my friend. And if you have any question, please put it down in the comments below👇.