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Below is the transcript of a speech given by the current VP of Membership given on 6/3/2009.
COMMON SENSE TO FINANCIAL FREEDOM
Have you heard the news? The economy is in the tank! If you’re not worried about your finances now, you’re worried that you’re going to have to worry about your finances pretty soon! I’ve attended many Continuing Education classes on financial management, but never have I had these basic financial principles put to me so clearly. I’d like to share with you the five secrets to financial freedom. This isn’t a get rich quick scheme, more like a lifestyle change. These are five simple things you must do to see a tremendous difference in your financial status. You’ll be much better prepared the next time the economy takes a downturn, and you know it will.
1. Keep good records
Ignorance + easy credit = disaster, wouldn’t you agree? That’s part of the reason we’re in the mess we are in.
There are four things you must keep good records on:
1. what you owe
2. what you own
3. what you earn
4. where it goes
You might be tempted to say “I don’t have time to do all that”. But I say to you: If you have time to worry about it, you have time to write it down, key them into a spreadsheet, use Quicken, whatever feels comfortable for you, but do it.
You have to know where your money really is.
Remember, money does have a way of talking when you’re not paying attention, it gets up and says bye-bye.
2. Plan your spending, yes, this means budgeting!
“Plan carefully and you will have plenty, if you act too quickly you will never have enough” Impulse shopping anyone? Did you know that the average American spends 6 hours a week in shopping related activities. That’s more than some of us exercise!
Here’s a mental trick to help you overcome impulse buying: if you’re tempted to buy something less than $100, wait & think about it for a day. If you’re tempted to buy something less than $1000, wait & think about it for a week. If you’re tempted to buy something over $1000, wait & think about it for two weeks to a month. You’re not telling yourself “No”, but disciplining yourself to resist the impulse.
As a borrower you are a slave to the lender. You’re not working for yourself, you’re working to pay off your debts.
Financial freedom is not determined by how much you make, it’s determined by how you spend what you have. You have to plan the spending so you can get out of debt.
3. Save for the future
It is a fact that we spend more than we make. The Chinese save an average of 30% of their take home pay, and before this economic crisis we saved an average of about 0%. According to Money magazine, we’re up to 4% now, so there’s some progress there.
You need to have saving goals. If this economic crisis has taught us anything is that we are not ready for the future, we are not saving for hard times, we are not ready for retirement. Get into the habit of saving. Start with 1% of your take home pay, set it aside the same day you get paid, and keep working your way up every few months until you get to at least10%.
4. Enjoy what you already have
Indulging in luxury will never make you wealthy, why? Because you’re spending all your money!
Things do not buy happiness, we all know it, but we still buy into the notion that the next gadget will make us happy
We are working longer hours than our parents did. Why? So we can make more money. Why? So we can buy more stuff.
Spend time with your family/children, doing something you truly enjoy. Make memories money can’t buy.
Think about this, if things made us happy, then the richest people in the world would be the happiest, but we know they are not.
5. Give tithe to God.
The Christian faith teaches us to bring back to God, 10% of what we make.
Ever wonder why? Because God is a banker? A loan shark? No, it’s a matter of obedience. The purpose is to put God first in our lives. But this command comes with a promise, in the book of Malachi we are told that if we bring back the 10% God will open up the windows of heaven for us and pour out all the blessings we need. It goes on to say to TEST God on this one, see if it isn’t true! Personally, I’ve been testing God on this one for over 20 years and I have always had my needs met. Try it out, TEST IT OUT. Hey! God wants you to test it out! It says so in the Bible!
What I have outlined to you is the 80-10-10 financial principle. Learn to live on 80% of what you make, pay God 10%, pay yourself 10% (for the future).
You really can’t pick and choose which principles to follow, you have to do all five principles to make it work. It’s simple, a bit painful at first, but I guarantee that it works. If you don’t manage your finances they’ll end up managing you.
