Beating Broke

Personal Finance from the Broke Perspective

Using your network to achieve your financial freedom goals

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This is a guest post by Millionaire Mob, a blog focused on investing in dividend growth stocks, passive income ideas and travel hacking. We have helped thousands of people with bettering their financial future through our personal finance tips.

A solid network is a promising asset in your financial freedom journey. Having a strong network is crucial to achieving financial independence.

“No man is an island” an old adage goes.

How are you utilizing your existing networks to reach your financial goals?

We are social beings and are connected with different people within different circles. We have people around us some who are family, friends, and colleagues that we have formed a strong bond with. These people can support us in one way or another to realize our financial goals.

Before you enlist the help of your network, you first need to have a clear goal of what you intend to attain. You need to plan why and how you will accumulate wealth and build a firm financial foundation. Our study shows that the true meaning of accumulated wealth is approximately 11x your income.

Set a plan of action with details of how you are going to generate income. Find out how you can diversify your income sources. Perform a research on different investments available to you. Read different resources to discover more information about the types, the advantages, and disadvantages of different investments. Get the opinions of diverse financial advisors and join their networks. Consider different investments that you can involve in. Engage in active, passive and portfolio income ideas. Consider getting a part-time job or try to obtain online jobs. Check out this list of over 23 proven online jobs without investment.

Whatever your financial targets are, they need to be clear and achievable. Define your deliverables, set quantifiable goals and gauge the level of risk appropriate for you. Set a timeframe on when to achieve every milestone. Be disciplined and avoid that which can distract you from your vision. If you set realistic goals, you are more likely to attract people with similar financial ambitions and resolutions.

Here are 4 surefire ways in which you can use your network to achieve your financial freedom goals:

  1. Foster quality connections

Your networks can be a great resource that will connect you to your dream job or an amazing opportunity that will change your financial situation. You can find potential partners to strike profitable business deals with that will take your business to another level. Your connections can also become your clients if you can offer valuable products to them. All you need is just to be outstanding in what you do.

These prospects this can be obtained without necessarily spamming your connections but by presenting and positioning yourself in such a way that opportunities find you. In one way or another, it will help raise your financial position and ultimately reach your financial goal.

With recent developments in technology, it is easier today to make more connections with friends, bosses, classmates, customers etc over social media platforms such as Facebook, LinkedIn, Whatsapp and Twitter among others.  Take advantage of these platforms to expand your circle of influence. Reach out to potential employers and be ready to grab every opportunity that may come your way. Be ready to deliver value and to produce exceptional results in your work so at to get referrals. When you are outstanding in what you do, you are more likely to attract and maintain quality connections that will thrust you to your financial destiny.

  1. Start a financial challenge

A challenge helps to keep the participants on their toes until they achieve their objectives. Start a financial challenge, for example, a challenge that can help to fix bad financial habits that can ruin your dream.

You can start a challenge to clear all your debts within the shortest time possible and enlist your networks to become part of it. Get and share resources to motivate and inspire each other to pay off debts.

It could also be a challenge to live frugally and to save as much as possible. Start a savings challenge. Find ways to help save and reduce expenses. Share discounted products, items on sale, and couponing ideas among other saving tips. You can also incorporate the use of different financial apps. Some apps like Spendee, Dollar bird, etc help you to track your expenses, manage budgets and track purchases among other great features.

You can form a group of friends or create a savings group through social media and start the challenge. It can be a year-long or a few months challenge. Make clear the rules and the governing the group, set milestones and track the progress.

For each month, week or day try to set-up or create a task to accomplish, the tools that you will need and the timeframe to do it. At the end of the challenge, gauge the outcome and see if there were any changes in your financial position. Create a new challenge and continue with the cycle.

When you create a group of people who are up to the challenge, it helps you to remain committed to the main agenda of the group and to be accountable to each other.  A financial challenge can help to keep you on the check and help you to avoid bad financial habits that are not aligned to your ultimate objectives.

  1. Keep learning from the best

Ensure that you have connections with people who have similar interests and learn from them. They may be resourceful especially if they have done something or have similar goals that you intend to achieve. They can also share with you different tips and tricks, what to do and mistakes to avoid achieving the specific goals.

  1. Share your interest

Share your financial objectives with people in your networks. You can use the social network platforms to engage with other professionals, join groups and forums that discuss financial matters and opportunities. Share content, create and post blog posts and online profiles with an aim to connect with other people with similar interests.

You are more likely to get tips and tricks from people you share related interests with. They can also encourage and motivate you to remain focused on your financial goals.

Bottom line

Financial freedom cannot be achieved in isolation. You must have and nurture your connections and be committed to making it possible. You should make it a priority to prepare and set clear financial goals before you enlist your networks. The financial objectives will also help you find people with common interests who will inspire you along the journey towards financial freedom.

How to Build Your Financial Foundation

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“Can I afford that?” 

If you’ve ever asked yourself this question and not been sure of the answer, it’s time to establish your financial foundation.

Think of a gleaming, towering skyscraper.  It didn’t appear out of thin air.  It took months of preparation and carefully designed installation.  Most importantly, that skyscraper’s construction started with its foundation.  Then, floor-by-floor, it was eventually completed.

The key point here is that the foundation came first.  It’s an absolute necessity to the stability and longevity of the building.  Without it, the tower would crumble.

Your financial foundation works the exact same way.

Without a proper financial foundation, your finances will never be in perfect harmony and you will never be financially stable.  Moreover, you’ll never relieve yourself of financial stress, which is a heavy burden too many people bear.

Financial foundations are an easy concept, but they take a mindful, dedicated approach to put together.

Sticking with the building theme, your foundation will consist of three “pillars”:

  1. Short-term money
  2. Emergency money
  3. Long-term money

Pillar #1: Short-term money “STM”

Your STM reserve will be used to cover your active, day-to-day expenses.  Think groceries, rent, utilities, etc.  Although there isn’t a universal dollar amount, there is a guideline you should follow to determine how large your STM reserve should be.

Follow the below steps to determine your STM reserve:

  1. Calculate the amount of money you usually spend in a month. If you use a debit or credit card, you can use your monthly account statements as estimates.
  2. Take this dollar amount and multiply it be three.

That’s it!  That number is the amount of money you should have set aside for your short-term expenses at any given time.  For example, if your monthly expenses are $1,000, you should have $3,000 in your STM reserve.  This covers the volatility and variance of your expenses.

Let’s face it, we’re all human.  Some months you’re going to spend a little more than others, some months you’ll spend a little less.  But with a STM reserve, you’re covered.

This will ease your day-to-day financial stress.

Pillar #2: Emergency money “EM”

Think of your EM reserve as a rainy-day fund.  You can’t predict your next fender-bender or doctor’s visit.  So, you need to have EM at the ready for such an occasion.

Again, there isn’t a universal dollar amount, but the calculation is easy: take that same monthly expenditure amount and multiply by six.  Using our example from earlier, $1,000 multiplied by six would give us a $6,000 rainy-day fund.

See how easy this is?  This number provides you six months of leeway if you were to ever lose your main source of income (i.e. your job).  This gives you plenty of time to reestablish that income stream or find a new job.

Pillar #3: Long-term money “LTM”

We’ve accounted for your active expenses and potential, unexpected expenses.  Now, it’s time to turn our attention to the future.

Your LTM is for your future goals, such as a house, graduate school, kids, etc.  The sooner you prepare for those occurrences, the sooner you can take advantage of compound interest.

After satisfying your STM and EM reserves, you should contribute at least 20% of your monthly income to your LTM goals.  If you’re making $3,000 a month, net of taxes, you’ll set aside $600.  Want to reach your goals faster?  Up that percentage.

And there’s your financial foundation blueprint!

Tie it all together

Construct these pillars by filling your reserves one-by-one, in the order listed.  In other words, start off by focusing on your STM reserve.  Once you’ve hit a comfortable point (i.e. about three months of expenses), move on to your EM.  Lastly, after you’ve covered your short-term expenses and potential, spontaneous expenditures, you’ll start investing in your future.

A solid, formidable financial foundation is integral to financial success.  These three pillars will provide clarity to your financial horizon and ease your financial stress.  I know it’s easier said than done, especially if you’re living paycheck-to-paycheck.  If that’s the case and you’re barely breaking even, create a budget and cut back on discretionary, non-essential expenses.  Or, commit some of your free-time to building a secondary source of income.  That way you’ll be on your way to sitting pretty at the top of your skyscraper!

You Need a New Money Mindset

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At last count, there were roughly 4.7 gazillion blogs(*give or take a few) covering money, saving, and wealth – this one included. And with great minds giving all-out efforts to helping people save up for retirement, stick to a budget, buy their first home, or find ways to save, there’s a message and a solution for everyone out there.

So, what gives? Why is it that over three-quarters of Americans are still living hand to mouth? With little or no savings to bolster their budget, they’re living in fear of what will happen when they lose work or have a sudden need for a large chunk of cash.

Why Your Money Mindset Must Change

Personal finance blogs proliferate because they can work. It doesn’t matter how far behind you are in the area of personal finance: it can be fixed and you can reach your goals with the right approach and a little guidance.

The problem is: too many people focus on the wrong things when they try and solve their money issues. The solution isn’t going to be found in cutting coupons or setting budgets aimed at whittling down debt a tiny bit at a time.

What has to happen, if you really want to improve your financial standing in the world, is you have to adopt a new mindset when it comes to money. That’s a behavioral change, and it ain’t easy. If it were, everyone would be debt-free, flush with cash, and right on track for retirement.

What a Difference the Right Money Mindset Can Make

The trick to winning at personal finance isn’t actually a trick. Rather, it’s a mind-change that starts with realizing what money is really for. I’ve known people who make almost six figures, and can’t figure out where all the money goes, and can’t pay their bills. Some of them don’t even have any kids!

On the other side of the spectrum, I have an artist friend who makes an annual salary in the low-$30s and he manages to max out his IRA contributions every year ($5,500 for 2016 but he’s 53 so he gets to put in $6,500) as well as live a debt-free, totally happy life.

What’s the difference? If you look at how my high-earning friends are spending their money, it’s pretty clear: their spending is out of control. They buy brand-new cars, for starters. Plus, they buy expensive cars- and most of them live right in NYC, where you don’t even need to own a car!

What is Money Really For?

Those are just examples- the things we buy, for the most part, are what bring us down, financially. Unfortunately, though, consumerism is built into our culture. We crave the new thing and we show status by displaying our nice things, whether it’s designer heels, a fancy car, or a home in the best neighborhood. We are what we own.

How to Adopt a New ‘Money Mindset’

Not everyone has to live that way, and in fact not everyone does. The people who figure this out early on in life are the ones who usually end up more financially secure, no matter what their salaries are.

Buying things is also a fast road to buying more things. People buy stuff and they enjoy the initial rush of pleasure they get from having something new. Then after a while they get used to the stuff and they want to experience that (temporary) happiness again. So they go out and buy more stuff.

Scientists have a name for that: “Adaptation level theory”. Recognizing this phenomenon in yourself is the first step towards developing the right money mindset. Once you master that, everything else is cake. You’ll have more money to put toward the important things in life like travel, retirement, emergency funds, living well, and even maybe someday leaving a legacy to your heirs.

Instead of buying “things” why not invest in yourself like learning more about financials, taking a course in trading, going to night college to gain a new skill to further your career.