When it comes to financial planning, the first step in the right direction is getting our thoughts under control. Let’s bust the myths and explain a few toxic thoughts that can potentially keep you from achieving your financial goals.
To be financially free, you have to have a few million in your account
Not necessarily. Financial freedom is having enough passive income to cover your basic needs. That means your financial freedom is really yours to define. If your basic needs (food, housing, transport, etc.) can be covered by just £1,500 a month, you can call yourself financially free by finding ways to generate that amount in passive income.
When you have a few million in your account, you’re financially free
Coming back to myth number one, it really depends on your monthly needs and spending habits. But there are also a lot of people with hundreds of thousands or even millions in their bank accounts and they are living in constant fear of losing their wealth. Not exactly what you would call financial “freedom”.
For better financial stability, you need to earn more
If you don’t have financial goals and you’re not keeping your spending in check, no amount you earn will ever be enough – it’s easy to find excuses to spend more. After all, you’ve worked hard to get it and you want to treat yourself to something special every now and then. That’s absolutely great, but remember – you’re the one in charge, not your emotions. So set your goals and stick to them, putting money aside every month. And have a special piggy-bank for your splurges too.
But spending is so much sexier than saving
You know what’s even sexier? Spending with a peace of mind – your bills are paid, you have food on your table and a little extra cash for unforeseen expenses. Confidence feels great. And if you have that confidence in your finances, you can weather all storms.
It sounds great, but I can never do it
You can, but it depends on how much you want to have your financial stability. Take a good look at your spending and figure out what can be improved – do you really need to drop by Starbucks every morning? What about those café lunches every day at work? Do the math and figure out which luxuries are you willing to give up now to live better in the future.