Savings, Credit, Financing & More: What Is Your Plan?
So you have a lot of plans, right? Plans for the future. Depending on who you are, they'll vary widely but we all have a lot of plans. It doesn't matter how much money we make, where we live, how old we are, or what were doing right now with our lives. Even if we're completely content with the way things are, each and every person reading this has some kind of plan, goal, dream, or feat to achieve.
The interesting thing is that not all plans are created equal, and not all plans are of the same caliber. Some of us plan like it's going out of style, while others hate to plan because it makes them feel like they have a heavier burden or too much pressure. In any situation, regardless who you are and what you want or need, planning is inevitable - at least to some extent.
Planning Your Financial Future Requires Credit
We can't discuss planning without discussing finances. After all, this is one of the main aspects that drives and affects our plans and even our ability to plan. While you can plan to take a walk in the park later today and it won't cost you anything, real planning is almost always based around one single thing - money.
It doesn't matter if you're planning a vacation, planning to have kids, planning to sell your home (or buy a home), planning to retire, planning on going to college, planning a career change, or even planning to change your internet provider - it always has a cash amount attached to it in one way or another. In fact, most of the time, the need for planning itself is based on money more than any other factor, with timing coming in immediately in second place.
Almost everything we do is based one plans, even if we don't see it that way. This blog is being written with a goal in mind, and part of that goal is an important part of a much larger plan. You see, planning in not only inevitable, it's unavoidable. You don't have to think of planning as something long-term, but when finances come into the picture, you're going to be in much better shape if you look as far into the future as possible.
What are your actual goals? How will you achieve them? In today's mindset, everything seems so fast paced. Many of us are living paycheck to paycheck, and financial planning seems like a waste of time unless you're talking about planning what bills to pay first. But in all honesty, it doesn't have to be that way. Even those of us with the smallest incomes can make minuscule changes to the way we live, the way we see things, and how we perceive the future in an effort to find something that helps us advance financially. Sounds unreal? Let's explain a little.
The money you earn might not be much, and you may be limited to your job choices or stuck on a fixed income without much flexibility. This makes it very difficult to imagine the ability to make any real changes. But a lot of this is just the way we think, it's something that lives within our ideas and perspectives. The truth is, most of us think extremely short-term. In other words, we're not looking at the bigger picture - and it doesn't matter if you're wealthy or poor, it's just the way we've been wired. Social media, education, and popular culture have made it very easy to seek instant gratification rather than discover and understand the value that lies in planning ahead.
We don't want to sound like financial advisors (because we're not, we're a tradeline company), but the truth is that you really must plan if you want to meet your goals as quickly and easily as possible. For example, you might say "I'd like to save money to begin investing in something, but I just don't make enough. Plus, I'm not sure what I'd invest in even if I had money!"... And so you are mentally limiting yourself before you even get started. How many years will you continue paying for cable TV, making a new car payment, or going out to party twice a week before you realize how much money you could actually be saving?
At the very minimum, you should be building your credit constantly. Building credit is an extremely important part of planning for the future, and we'll touch on that a bit more in a minute. For now, let's try to put things into a 3-year perspective.
The 3-Year Planning Perspective
Three years seems like a long time. In fact, it seems like a very long time for most of us. Even though we know it will pass rather quickly, there is so much that can happen in that time frame, it's difficult to believe that when we actually arrive at the 3-year point and look back in reflection at the starting place it really won't seem too long ago. It'll seem like just yesterday - even if a lot has happened during that time. But this is the secret to the long-term. You must be dedicated, and you must find value in it. You must actually know and understand that there is so much value in it that you'd be foolish to NOT plan for it. After all, it's not a lifetime - it's only 3 years. The problem is that when we don't have much money to begin with, we tend so see financial planning as suffering. It's an unfortunate and unhealthy outlook, but it's true.... and a big part of it is based on that factor of instant gratification.
Surely all of us have our "financial vices". It could be going out partying too much, buying expensive clothes, eating at expensive restaurants, or even spending too much money on beauty or self-care products each month. We're almost all guilty of these things in one way or another. Buying one energy drink every morning might not seem like much, but at $4 each, that adds up to $1,460 a year. We might deem internet as a basic necessity (and rightly so), but in addition we'll spend another $120 per month on cable TV, and that adds up to be $1,440 per year. If we manage to somehow cut another $100 per month of spending on miscellaneous items that we don't really need, or even save that $100 through purchasing different brands or using things at a slower/lesser rate, we'd have another 1,200 at the end of the year. So by simply cancelling our cable TV, not buying an energy drink each day, and being creative with our most basic spending habits we've already accumulated $4,100 in a short 12 months. And how bad does that require us to suffer? Not that much. And if we simply save it and pretend that this money never existed, we'd have over $13,000 in 3 short years.
Here's the catch - most of us are asking ourselves, "and what can I do with that $13,000?". This is a problematic way of thinking. We don't really need to have a plan for the money. As we mentioned, a lot can happen in 3 years. But it sure would be nice to know that we hardly missed out on anything when looking back, and we have a nice little stack of cash to show for it. Your ability to save in this fashion might equate to much more than $13,000 if you make more money or if you decide to cut back on other expenses too. But that's not the point. The point is to get into that mindset of what your financial future looks like without doing any planning at all. It should scare you a bit if you're honest with yourself. And this is the reason we've wrote this article - not to scare you, but to help you understand the importance of thinking in the long-term, or at least a few years ahead.
The Biggest Tool For Financial Success
Apart from liquid cash itself, the biggest financial tool you can acquire is leverage. Leverage can come from a variety of sources. It can be assets, savings, or even a great credit score. Having financial leverage makes a world of difference and can make or break your ability to advance in life. Even if it's in smaller steps, whatever leverage you can acquire is better than nothing.
Having excellent credit is one of the most powerful forms of leverage available to the average person. Since we don't have piles of savings laying around, or various rental properties, or tons of costly assets, credit is an ideal form way to continually create positive forward movement - as long as you know how to use it wisely, and as long as you don't over-extend or abuse it. A little bit of cash saved up (like the $13,000 we spoke about above) plus some good credit (which can easily be acquired though buying tradelines, although that's a story for another day) and you can buy a small home. It's probably not going to be a forever home but it's something you'll eventually own. Even if you already have a home, that could be an investment property opportunity where the rent covers the mortgage payment and even leaves you with a little extra cash.
Now you're beginning to gain more leverage, and open new doors. And it all began because you decided to stop buying energy drinks, to cancel your cable TV, and to be a bit more thrifty with your monthly spending. Or, you can do nothing, and have nothing, but you would have enjoyed your energy drinks and the endless hours you spent watching TV. At the end of 3 years, you can be the person who advanced, or the person who is still broke. And just because you saved enough to buy a cheap home doesn't mean you won't be broke anymore. It does, however, show that you've learned to tame your short-term desires to make financial goals happen, and this will likely lead to your next goal being a bigger and better one.
I Make No Money, My Credit Is Bad, and I Have No Savings
If you find yourself in this situation, you have to pickup where you left off and get your act together. Prioritizing is key, and since you're definitely struggling at this point, you'll know very well what's the most important thing to do. If not, you might seek the help of a friend or family member who is financially wiser than you and ask them to help you with basic budgeting. Create a plan that will set you on the right path, and stick to it. If you don't, you'll have a whole lot of hard times ahead.
Now this is not to say that it will be simple. As mentioned in the beginning of this article, everyone has their own situation. You may be unable to work due to a disability or other unfortunate, underlying factor. But you can't allow that to be an excuse for non-advancement. There are people in wheelchairs who participate in marathons, and there are blind people who play music for a living. If you have will and motivation, you will always find a way.
Create Your Plan Now Because There's No Time For Excuses
Get motivated, be determined, and start moving in any direction that leaves a path behind you. The sooner you begin, the sooner you'll see and feel enough momentum to keep going toward your goal - even if it's something that another person may view as simple, or even pathetic. Forget about what everyone else is doing and focus on your plan. It can be the 3-year plan, it can be a plan to buy a bicycle so you can transport yourself to work, or it can be a plan to purchase a small business. Whatever it may be, get started now and stick with it. Time is on your side, but it's equally always working against you because the clock never stops ticking.
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