You may have read the past three posts and are super inspired but have no clue where to begin! The five financial tips below will help you begin conquering wealth the minute you commit to producing wealth and not just looking like it. Let's go!
1. Downsize If You Have To
The old saying is true “Keeping Up with the Jones’ will keep you broke.'' I’ll add to that “keeping up with yourself and a lifestyle you can’t afford will keep you broke.” Be honest with yourself. If your monthly expenses influence you to use a credit card you are living above your means. You can have an A+ credit score but still be broke.
When qualifying for a mortgage, lenders typically approve you for a maximum loan that you can’t afford. How is this? Lenders only weigh debt payments to income commonly referred to as a debt to income ratio. They then qualify the loan based solely on the percentage of the monthly minimum debt payments in comparison to the desired loan amount.
This can be a danger zone because non-debt yet necessary expenses such as childcare, federal and state taxes, utilities, etc. are not factored into the equation thus leaving an applicant vulnerable to obtaining a loan they cannot afford. Remember the real estate crash in 2007/2008? This was partly due to people obtaining loans they could not afford.
Auto loans are even more lenient. Just walk into a dealership and they will give you a loan. Don’t worry about others may think if you elect to downsize. It’s you paying the bills, not them.
2. Limit Celebration Gifts to $10-$15
Sometimes you may have a month when you have been invited to 4+ celebrations. This can easily break your wealth producing budget plan!
When gift giving it’s important to remember that your presence is valued over the gifts that you give. Think of the last party you did not attend but sent a gift. The host and honoree likely appreciated the gift but would valued your presence in the celebration over the gift.
If you are in the wealth building stage of your life limit gifts to $10-$15 per person. Retailers such as Things Remembered, Aldi and Amazon Gifts all have great gift giving options that will keep you in your budget! Hip2Save is also one of my favorite bargain sites. They tell inform you of all the great deals taking the work out of traditional couponing.
We once gave a child a $10 birthday gift card to Target and his mom later told me it was one of his favorite gifts because he always wanted to pick something out for himself with his own money! Talk about a win-win!
3. Plan Your Spending & Have a Financial Planning Meeting Monthly
This is the most important area of wealth building. You must plan and direct your spending each month. Otherwise your money will tell itself where it desires to go based on your emotions and feelings. Feel like going to Starbucks, your money will end up there too!
The key to planning your spending is having a financial planning meeting with yourself and everyone in the house prior to the first paycheck of the month. For example, if you are paid on the 1st and 15th ideally your meeting should occur no later than the 31st of the previous month.
Once your direct deposit credits your account you will know exactly where your money should be allocated to. Leave as little money in your bank account as possible to avoid frivolous spending. This is called Zero Based Budgeting which I will highlight in more detail in another blog post.
4. Use the Envelope Method if You Belong to Swipers Anonymous
Do you have a problem swiping your debit card too much? Take out the cash you need for the month and place it in envelopes designated for particular purchases. Studies show that people spend less money when paying with cash verses using a card.
5. Tithe 10%
Tithing is an essential discipline one must master if striving to become a good financial steward. I already know what some people's response is: “I can’t afford to tithe” or “the Lord knows my heart”. Yes, the Lord knows one’s heart and one should always give cheerfully. However, special benefits are available to those who choose to tithe.
“Bring all the tithes into the storehouse, that there may be food in My house, and try Me now in this,” Says the Lord of hosts, “If I will not open for you the windows of heaven and pour out for you such blessing that there will not be room enough to receive it.
And I will rebuke the devourer for your sakes, So that he will not destroy the fruit of your ground, Nor shall the vine fail to bear fruit for you in the field,” Says the Lord of hosts.”
God’s umbrella of protection and so many blessings that there isn't enough room? Sign me up! You don’t have to be a rocket scientist to know that these two items are desired by everyone and the generations to come!
Thank you for reading this four part series on Generational Wealth! I have prayed for you and encourage you to be a good steward of your finances now and for the generations to come!