Ever wondered how to gain financial freedom so you have no worries about money? Are you spending more than you make and going deeper in debt? You CAN reverse that trend!
The first thing you need know is this: if you are making financial planning decisions based on how much money is in the bank right now, then you are being controlled by the money, and this usually creates a constant worry about money problems. You need to control the money to gain financial freedom; not the other way around.
Fortunately, there is a money management system that you can use to control your income and debts to get on the road to financial freedom. However, most people are completely unaware that it exists. This is not the type of financial planning involved in investments such as stocks and bonds. Here are the seven steps of this money cash flow management system:
1) Accurately predict how much money is needed to operate your household this week and in the future. You can use this same success formula if you own your own business as well.
Figure out exactly what has been spent, by category, over the past year. This becomes the budget. The correct definition of budget here is: the amount of money it takes for the organization or household to function and to attain its goals. This is also called the break-even point and tells you the minimum amount of income required just to stay afloat.
This is the first step in effective cash flow management. In order to be successful, you have to know where you are and you have to know where you are going.
2) Figure out how to collect the amount of income needed, and more, to do better than just break even. Remember, you?re going after YOUR financial freedom here. This may mean learning new skills to get a raise at work, picking up a part-time job, or starting your own business from home to create added income.
3) Find out exactly how much you owe in bills and other debts. This takes a bit of courage to confront, but what you don?t know because you?re just not looking at it, can undermine your profit and wealth building progress.
4) Find out how much of your income is actually available to spend. Most people forget that when the money comes in, some of it is already committed. When you spend more than you brought in, the difference usually ends up on a credit card as debt. When you are striving for financial independence, getting your spending under control is critical.
5) Set aside regular amounts of cash from your income for the future ? always pay yourself first and put the money in savings toward gaining financial freedom. For substantial wealth building, a minimum of 10% is recommended. If you are unable to start with 10%, start where you can and work your way up. The KEY is to make sure that you START.
6) Portion out some of your money toward paying past due bills, debt, current bills, and then portion out a bit for future large expenses that are difficult to pay when they come due. Careful, consistent money management can speed up your wealth building progress.
7) Use any money left over in ways that increase your ability to produce more income. Why is cash flow management so important? Your cash flow is the energy and life blood of your household and your business. It is necessary to pump it through the income producing areas to keep it running well. Everything runs smoother when cash is available.
Seems simple, right? And it is simple. This system is easily learned, and can be used to do these seven steps of Financial Planning in very little time each week. It does, however, take personal discipline and commitment to achieve the goal of financial independence so you never have to worry about money again. Done correctly and consistently, the end result is always having lots of cash on hand, all bills paid, and plenty of money in reserves to finance what you really want to do with your money; not just pay bills. Who doesn?t want that, right?
To use your money wisely, you need to treat it as a resource. Correctly managing your money will determine how well your company or family will survive now and into the future. Correctly applying these seven steps of Financial Planning will make financial freedom happen for you.
Dr. Mike Cockrell
P.S. If you are not making all the money you want and are looking for an opportunity to increase your wealth, collect more assets and create a monthly income stream, you should consider joining us as we move ahead toward taking control of our destinies. To learn more follow the link below:
Collecting Assets and Creating Wealth
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Source: http://doctorcockrell.com/7-steps-to-gaining-financial-freedom/
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