(9 minute read)
Your financial game is at it’s best when consistently attended to without hiccups. Consistency is bred out of habit and not out of obligation. When you make things part of your routine, they stick. When you do things out of obligation they are in direct opposite alignment with your personal power. Not a win.
In order to generate a win, the theme of your financial life and life otherwise must read: new habits and an improved routine.
Below are 12 financial strategies I call nuggets, listed in no particular order. These nuggets (tid bits of information) are designed to help you create abundance in all areas of your sphere as a result of your peak performing finances.
Envision abundance as unquantifiable positivity – as in, there’s so much of that shit you can’t measure it. In this case, I mean a shit ton of magic spilling in excess. The good energy you give to those around you is a boomerang of magnetic fortune in itself.
The below are by no means exhaustive, though decent rules of thumb in consistent practice. Before you know it, many will become unconscious actions paying you dividends in your sleep.
1. Have goals, create a strategy and execute a plan
A time-lined target and a plan to achieve it are key in goal realization. Without these three ingredients (the goal, plan & timeline), you are simply treading water. Ask yourself why you have the goals you do in the first place, and then execute.
Write down on paper your goals, strategy, and plan. You need a reference point to measure and account back to. Let it be your roadmap.
2. Automate your savings
Remember that mini-convo we had about, “I don’t pay for healthcare”, when in reality, you do? Those Benjamin’s, “bucks” if you’re Canadian, come directly off your pay cheque; as per your employer or directly out of your bank account if you’ve subscribed independently. Funny how you don’t miss or spend that money when it’s not there in the first place.
What you are going to do, is allocate a percentage of each paycheque you receive to automatically be banked somewhere other than your checking account. If you work for yourself, you too, are going to automate ‘X’ amount of dollars to be directly transferred to this ‘other account’ every two weeks.
3. Contribute to registered savings accounts
Registered savings accounts are tax-sheltered homes where your savings and investments within can live rent-free for a period of time. That is, without taxes being paid on them.
By contributing savings dollars into these registered accounts, you do not pay tax on that money today, you pay tax on that money when it is withdrawn in the future, presumably when you are in a lower tax bracket (aka: retirement). Investments within these registered savings accounts grow tax-free and also, are only taxed when withdrawn.
Note: although a registered account is a safe haven for savings dollars, contributing funds to into one of these accounts is still not considered investing, until you’ve allocated those dollars into an income generating security (equities or fixed income products). More to follow on an investment note in another post.
4. Reduce/eliminate debt
Priority one aside from saving is to eliminate debt. In case you’re unaware, 19.9% interest is not a great borrowing rate as provided to you by your credit card company. Do not carry a balance on your credit card if you can help it. At minimum, never miss a payment date for the minimum payable amount.
Consolidate high interest bearing credit cards, lines of credit and student loans to the lowest possible interest rate available to you, and pay down this combined sum. Shop around to various financial institutions for the lowest possible interest rate. You aren’t strictly limited to applying for lower interest rate credit solutions where you primarily do your day to day banking.
5. Educate yourself
Resource one: there is a wealth of free personal finance information on the Internet. Resource two: use those in your sphere who possess the knowledge and experience you are looking for, be it a friend, someone’s spouse, a parent; just make sure to check their credibility. Resource three: take a course to upgrade your financial knowledge. Resource four: hire a professional financial mentor, cash flow strategist, investment advisor, accountant, or mortgage broker when the time comes. These professionals will educate and help create a solid financial strategy just for you in their given area of expertise.
If you’re unsure of any terminology, Google and put the pieces together. Knowledge is power; the more you know, the better able you are to apply this knowledge and make sound decisions.
You don’t need to hire an investment advisor based at a full service brokerage to participate in the stock market. There are alternative avenues called discount brokerages, which are the DIY of investing. Brokerage options will be different for everyone. Considerations in choosing a full service brokerage vs. a discount brokerage are investable assets, needs/expectations, time horizon, risk tolerance, and the level of expertise & support required ongoing, if any.
Discount brokerages are more affordable alternatives to hiring an investment advisor and are fairly user friendly. My fave Canadian discount brokerage (and one I have a relationship with) is Questrade arms in addition to their wealth management/full service brokerage divisions. In the US, one of the top discount brokerages is eTrade.
Always consult a money coach or investment advisor to see which avenue is most appropriate for you. Most coaches and advisors offer free introductory meetings.
7. Diversify your portfolio
Don’t put all of your eggs in one basket, literally. Picture the Titanic tipping over and all your good shoes, yoga pants, health food & beauty products are on board. Diversification refers to not only investing, but also to varied streams if income. The average millionaire has 7 streams of income. That’s a fact. Be creative and use your unique resources.
Examples of additional steams of income include: earned income (for your services), profits (margins in excess of your cost if you are selling a product), real estate (purchase said asset, rent it out), royalties (residual income from a product or service you’ve provided at one point in time, and continue to earn income from over time), and various streams via investing in equities and fixed income securities.
8. Spend money to make money
Invest in professional services that will positively affect your business or well-being. This could also be a product that makes your business or life run more efficiently. Evaluate the long-term value of this investment and the return it will provide. ROI stands for return on investment. Catalog the term. You will hear it often.
If the long term benefits outweigh the up front cost of whatever the healthy investment is, you’re in the money; as in, the long term return is greater than the short term investment.
9. Manage your emotions
How many decisions have you made in an emotional state and regretted later. I’m sure your track record isn’t phenomenally clean. Don’t invest based upon your feelings. There is an enormous difference between going with your gut, taking calculated risks, making smart investments, and decisions in general. Investor psychology to be discussed in another post.
Rule of thumb: ensure a clear conscious when decision-making. Do not make decisions when you are elated, sad, lonely, or are inebriated. The decision will most likely be skewed based upon your perception at that inconsistently calculated moment in time.
10. Sacrifice in the short term, exercise willpower, hold vision
Whoever told you that you can have it all without sacrifice was blowing smoke up your ass. When was the last time you ate yourself into a state of gluttony and felt like gold? I’m not even going to mention the negative effects on your once healthy body. Point: widespread indulgence without mindful sacrifice is plain ill contempt.
In order to gain long term, you are going to have to sacrifice something in the short term. Skim the fat from areas where you can, or give something up if it’s not changing your life for the better. Whatever you can come up with, invest that sum of money consistently.
11. Have long-term faith and purpose
In order to succeed we need to be motivated. What motivates us is fulfilling our life’s purpose.
Ask yourself what your purpose is and why, and structure your actions full force towards whatever reaffirms this. Faith in something greater than yourself, humankind, the universe, a relationship, yourself, family, etc. are all drivers. Baseline, you wouldn’t show up for work and be a law abiding citizen if you didn’t have faith in something – even be it the literal promise of tomorrow. Whatever it is, allow that to remind you why all other action steps are necessary.
12. Get healthy
Optimal health equals ease of everything else in your life. Feed your body nourishing food, incorporate fitness into your routine (at least 30 minutes/day), and strengthen your mind. Strengthening your mind can be done through reading, meditating, learning. Become a conversationalist on a topic you’ve always wanted to learn more about. Create recipes using your favorite vegetables, and do squats while dinner is cooking. Get creative.
All things combined, you are set to be bullet proof – or at least armed with some solid weaponry in relevant knowledge. Got questions? Ask.