Caution if you are reading this you are willing to invest in your knowledge of finances. To kick this message off, the starting question that you should be asking about your finances is “how important is it to you?” self reflecting about the importance of your finances is key to realizing where you’re at with your finances. If your finances is important great, and if your finances are not as important to you then lets improve that.
The key to success is to be aware, so I say to you be aware of your finances. If you lost your job today would you be able to live comfortable for at least three months?
To tell you a little bit about myself and why I am so passionate about finances is that very question. Last year I put everything I know about finances to the test. I minimized my expenses, I saved a third of what I was making, I kept half of my money in a high yield savings account, and I bought stocks that gave dividends. I was planning on quitting my job as a car salesman because I wanted to further my education on business administration. It’s been six months since I quit my job and I currently rely on the interest and dividends provided by my stocks and high yield savings account.
I may not have a degree in accounting or Business but I am constantly practicing and learning more each day about finances, Investing, Belief, and Business. My question to you as a reader is will you join me on this journey to success.
Warren Buffett is one of the most successful business men, that I look up to as a mentor. He is constantly investing with caution. For instance, When Warren Buffett was starting his business as an investor he had $9,800. Eventually Warren increased his capital to $140,000. Warren Buffett increased his capital by being interested in how a company worked and what made it superior to competitors, rather than just looking at balance sheets and income statements.
What is going to grow your saving, your investments, and your finances in general; is how cautious you are. Here is a quote from Warren Buffett about success.
high returns with low risk is the key
The best way to lower risk when it comes to investing is being cautious about who you are investing in. It is important to be aware of the state your finances are in as well, just like investing the more you know the less debt or the less risk of going in debt you will have when dealing with your finances. Now you know the importance here are some application steps you can take to be more cautious when dealing with your finances.
- Review your bank statements
- Look at your regular expenses
- Lower fast food or coffee expenses
For the first point, the reason why I say review your bank statements because it’s a way to self-reflect on your spending. Ask yourself, “Where is the majority of my money going?” It is important to be aware of your spending because sometimes we get a little too carried away with spending money we don’t have, on things that we think we deserve. If you have to use a credit card for a purchase, you have not earned the right to make the purchase.
For point number two, Looking at your regular expenses help you find out how much is left over after your bills. If you don’t have any money left over, that is a key indicator saying that you either have to cancel a subscription or gym membership you are probably not using. It can also mean you have to down grade either your TV provider or Cellular Service. This a little change that can make to give you a little bit of financial relief. Which means more money for investments.
Last but not least, Lower fast food or coffee expenses. This is an automatic wealth killer because the average American spends $1,200 on fast food per year. If you stopped buying fast food for a year you can buy 6 shares of McDonald’s giving you a dividend yield of 2.23 per share which means more money made and less money spent. For coffee the average American spends $1,100 per year. That means if you stop drinking coffee for a year you will be able to buy 16 shares of Starbucks giving you a dividend yield of 1.86 per share (more money in your pocket).
I truly believe that if we can just be cautious in our finances we will be able to go from being low-income individual to millionaires. Just from being aware of our spending.