24 January 2022
How to Manage Personal Finances
Having success in your personal financial journey can seem such a fantasy and a mystery to attain. Some believe it is a destiny only for the very fortunate or lucky people. But despite this, you still have the urge to change your life into being more vibrant, care free and fulfilled. You want to improve yourself and increase your value. But when you decide to tackle the subject of managing your finances, the information can be overwhelming.
The overall buzz about getting rich, beating the system or leveling up can be very confusing. You can get pulled in so many different directions between books, courses, YouTube videos etc and the average person is still lost as to what concrete steps should be taken to arrive at financial freedom. How do you move from point A to point B?
Remember this blog it's all about keeping finance simple to understand and easy to manage. The first thing we must recognize is that finance is a game. Money is a game. And you can win by learning how to play.
In the Game of Money, there are 4 levels. Within each level there are challenges that must be completed in order to activate the points of that level. Each level is also a stepping stone to the next level. To truly win this game, we have to know which level we are currently at and how to advance to the next level successfully.
Delineating these levels will make it easy for us to know what we need to do to reach our personal goals. It also helps us to define what those goals are. And if we get off track with managing our finances, going back to these fundamental levels will show us where we went wrong and how to get back on track.
So let's break down these 4 levels. As you read, think about which level you may be on, and how close are you to advancing to the next level.
Being a financially stable person or household means you have these 4 basics challenges to complete:
With all these challenges completed, you have earned points (dollars) to enjoy the following benefits:
Being financially stable allows you to live a relatively stress free lifestyle where you can spend money on yourself without guilt. You are not living paycheck to paycheck, debt is under control and you have a safety net of savings in case of any pop up emergencies. You are a good citizen playing your part in the system. However you don’t want to stay here and just be good at paying bills. Level 1 is only a stepping stone to the next level. So when you get really good at being financially stable, you can unlock and proceed to the next level :
LEVEL 2- Financial Security
Level 2 is about building assets for the future. At level 1, your money is used for short term needs like rent, utilities, car notes etc. But level 2 is about long term goals that require planning and investment. To succeed at this level you need to complete the following challenges.
With these 4 essential steps in place, you have gained extra powers to not only acquire the following assets but also to maintain those assets. These include:
Having financial security means that you are not in jeopardy of losing your money and assets. Completing the four challenges of this level, means that you are financially structured to meet the negative impacts of significant events, and remain financially intact with zero to minimum losses or damages to the assets you are building. Not being properly structured when a negative impact hits can knock you right out of the game with huge losses. This level of the game takes hard work and sacrifice. It means a lot and it takes a lot to become a homeowner, or to send your children to the best schools. So it is crucial to guard your life work when you have gotten this far. And when you win at this level, you enter the new world of freedom.
LEVEL 3- Financial Freedom
Being a financially stable person or household means you have these 4 basics challenges to complete:
The player at this level wins the ultimate challenge and gains massive powers to:
Financial freedom, or financial independence is the payoff of having excellent financial security. This is where you reap the benefits of those assets you built in level 2. This level gives you 100% control of your money and your life. You can claim your prized freedom with confidence, satisfaction and peace of mind. The main purpose of this blog is to help people to get to this level in the game of money.
The final stage in the game of money is Financial Success.
This level is not a necessity to reach in life for everyone. It’s really for folks who want to go above and beyond. This is for people who are business owners and certain entrepreneurs. This level is about people who not only attain financial freedom for themselves, but also for other people such as employees and customers, and for future generations such as children and grandchildren. They help other people to enter the game of money and work their way up to financial independence. The rewards of financial success go beyond the life of the individual.
Now here are a few points to remember about winning the game:
- 1- each level forms the foundation for the next. While you are building your home and retirement in level 2, you still want to maintain your bills and emergency savings at level 1. You don’t want to miss out on your mortgage payments because you got laid off and have no emergency savings.
- 2-Seizing the rewards first, completing challenges later. In our lives we sometimes make the mistake of skipping the challenges of a level and seizing the rewards to satisfy gratification and live a lifestyle that we cannot support. For example buying expensive things and taking trips before budgeting and saving in Level 1. Save first, bills second and spend third.
- 3-Skipping challenges and unlocking rewards. Without knowing it, we can start unlocking the benefits of a level before all the steps are complete. Like taking on a long mortgage without proper planning and having
- 4-Skipping a level or two to get to the next. I’m sure everyone knows someone, who calls themself a business owner entrepreneurial guru, and they don’t have a stable job, steady income and positive bank balance. They need to master level 1 or even level 2, but they want to play in the big leagues. I can’t blame them though because there is a lot of optimism and push to get people on a fast track to financial freedom but this often leads to frustration, disappointment and defeat. The ambition and attitude is right but the path is faulty.
All these are examples of advancing in the game before your course is clear. But these hacks do not give you true financial freedom or success. These mistakes put holes and weak points in your overall financial plan. The result is going to be what I call financial strain. Barely holding on to what you have and still trying to grab hold of the future. This leads to a lot of stress, anxiety and fear.
So where do you see yourself in the Game of Money? Are you at Level 1? Maybe you are on your way to level 3? Are you missing any challenges on your current level? Perhaps you may need to step back a level to take care of some weak points. Or maybe it’s about time for you to advance and achieve more with your finances.
I hope this illustration of managing finance was helpful to you.
Next Post
Coming Soon
Previous Post
