There are 5 fundamental financial qualities that the rich and financially successful individual have and I am going to touch on the first fundamental.
This is extremely important because the main reason injustice and oppression occurs today is that money talks and those with good intentions usually have shallow pockets.
As a result, the possibility to make meaningful change is limited.
Some may say, we live in the age of social media and everything is interconnected. While this may be true to some extent, someone always has to pay their bills and no matter how true a cause, the need to keep a roof over their heads will have people return from the streets to a cubicle in an office or 9 to 5 job.
If you’re someone who wants to make change, influence society in a meaningful manner. Remember that change starts with us and by applying the financial habits of the successful we can better our lives and those of others.
Let’s get straight into it.
Fundamental 1 – Know what your every dollar does
In other words, you need to track your money.
When I ask a friend, a family member or relative or even myself in my early years, the following:
What percentage of your income did you spend on living expenses, entertainment and investment last month?
The most common answer is “why do you want to know?” or “it doesn’t matter”, “not sure, maybe X”.
It’s often a mix of deflection with the underlying truth being that the answer is not known because it wasn’t tracked.
You could be an executive sitting behind the desk in a bank, or even a high-flying project manager.
Truth is more money doesn’t make one more financially responsible, it often makes spending freely easier and tracking it gets pushed to the not important category.
A survey in Australia found almost
- one-third (30 per cent) of Australians don’t set a budget,
- just under a quarter (24 per cent) aren’t saving any money at all, and
- almost one in five (18 per cent) are living pay cheque to pay cheque.
That’s almost ¾ of Australian citizens, one step from falling off a financial cliff. And now we have the COVID situation.
You can figure out how most of those stories might go.
The rich and financially successful people say, the road to success is to start with one simple step:
Budget your expenses and track your expenses.
The way my father thought me to budget my money was to follow 2 simple steps.
- Write down your expected income, in your case it is your salary, then it into four chunks:
- 50% goes towards your living expenses (includes mortgage/rent)
- 10% goes to entertainment
- 30% goes into shares
- 10% goes into a rainy-day account, that has no card linked to it.
- The second step is to diligently track my spending. The more detailed I was, the better decisions I was able to make.
Here is my current separation of chunks taken further and set up as different bank accounts.
This sets a clear delineation of your money and what role it serves you.
We cover all these topics and share how we do it ourselves at Tabarruk
This is not financial advice. Please read our disclaimer.