Technology, Money & Questions

If you wish to attain financial freedom, the first and foremost technique to learn in the game of money is to pay yourself first. Doesn't matter how you earn your main source of income. Be an employee or self employed or business man, the source of income doesn't matter. All that matters is, how much do you pay yourself?

Ironically, I do not mean how much you spend by saying how much you pay yourself. To be specific, I'd say, "How much do you pay yourself for your personal investment towards building your assets?".

If you just take a moment to think about this, you will see what your eyes can't see in the game of money. It's all about how do you manage your cash flow. Typically, what most of us do? We pay everybody else first and then we think about us, am I wrong?

Lets take a typical example - A salaried employee, "Mr.Xyz" who earns a handsome amount every month. Now-a-days every salaried employee holds a credit card, very typically, our Mr.Xyz also owns one. Also, Mr.Xyz easily managed to buy a house in a somewhat-to-be-prime locality of the city with a very little down payment, thanks to the very altruistic banks. Mr.Xyz says, "At the least, I'm going to save on my income tax". Truly false notion, Lets talk about this later. Suddenly, riding his bike seems to be a tedious task for Mr.Xyz. Here he goes, "What's life without a car? Lets get one, next years salary increment will take care of the monthly EMIs". Well done!

Mr.Xyz seems to have a content and secured life for somebody who does not know anything about him. That's not the reality. In reality he is no where near to being wealthy. Let's take a look at his cashflow.

Mr.Xyz gets his salary every month, after tax deducted at source. And then, he transfers a major amount for his flat's EMI and then comes the EMI for his car. At last, he has to pay his credit card bill. So now, he has to plan how he is gonna manage the next thirty days with the remaining amount.

Do you see what's going on in here with our Mr.Xyz? He has no investments towards assets, all that he holds near to him costs him very dearly. As I said in my earlier posts, an asset is something which brings money in. But, Mr.Xyz has built a lot of liabilities, with very less or no asset. Remember, as soon as you take up a debt you become an employee for your debt. There are always at least two financial statements for every transaction, more so here. Mr.Xyz's house is a liability in his statement, but an asset which brings in a lot of interest in the bank's statement. You are working hard to make someone else wealthy.

So, think about it guys. If you have any small interest in attaining financial freedom, then you have to take care of your cash flow. If there is a flaw in your cash flow, irrespective of how much ever money you may earn each month, the hole in your money management will drain all of it. You're left with no other choice than to work for many more years to come.

Follow the rule: Pay yourself first.

Pay yourself every month for your investments towards building assets. Live frugally, well below your means. Avoid unnecessary debts, improve your financial knowledge and improve your chances of being financially independent.

Do not work for your debts, rather let your assets take care of your financial needs and you follow your heart to achieve your passion.