Tag Archives: financial goals

What Are Your Sources of Income?

Within a household, you need to have multiple sources of income as well as multiple assets to build true financial security. If both income earners work for the same company or in the same industry, there is very little security in that.

How can you minimize this risk? Like investing, where one risk minimization strategy is to diversify among industries, type of investment, return, etc., the same is true for income within a family. For planning purposes, it’s best to have income into your home from different industries, different types of income (such as employment, self-employed, business, or investment), different payment frequency, etc. This way you cover your risk of income loss. Ideally you will want to ensure you have income that will continue regardless of whether or not you work to receive it. For example: investment income, royalty income, disability insurance, etc.

Change Your Thinking

Look for ways to do something rather than ways not to do something. For example, rather than looking for ways to decrease spending, first look for ways to earn the money. This is more inspiring and will often result in the reduction of spending. Thinking positively and having a “bigger” goal produces a bigger purpose which will likely end up in a shift in spending anyway.

How? Rather than looking at the situation and saying “can’t because,” or “if only,” or “…but…” keep asking, “Who? What? When? Where? How?”. Keep asking and asking. As soon as you say “can’t”, you stop looking for answers.

Pen and Paper Planning

A simple notebook and pen is the best financial planning and tax management tool you can have. With every single purchase or financial transaction, make a note of what you bought and its purpose. For tax purposes, it is far less stressful to take ten seconds at the time of purchase to write on your receipt than it is to try to remember the details when you are preparing your tax information.

And, when you have questions about terms, strategies, and other financial matters, you can record them so you can find someone or someplace to have them answered later. You can also use your notebook to write details about items you have seen while shopping and ideas you have that can be explored for possible income generating possibilities.

Practice Positive Thinking

With practice, you can learn to take some typical financial concepts and see them as positive, rather than negative. For example, we are taught to set aside money for an “emergency” fund implying some sort of disaster could be looming around the corner. Instead, call it an “opportunity” fund and you can see that the same money could be used to take advantage of investment opportunities, “once in a lifetime” experiences or to support you through a rough time financially with more calm. You can also use the “opportunity fund” to take time to find new work if your existing employment ended, or to do repairs or renovations to your home if needed.

What other common situations are there like this example? How about “bad debt” replaced with the belief that the benefit of the purchase has already been realized? Is it “risk” or “opportunity,” “spending” or “investing in your lifestyle”? These might not resonate with your experience, but the idea is to become aware of the way you speak and to think more positively about common financial situations. There is more than one way to see everything.

What is Important to you?

Make all financial decisions based on what is important to you, not simply because you want to make more money. Why? What will more money mean? Why are you making that purchase or that investment? What will it mean to you in your life today and in the future?

Because: If you are not focused on what you truly want, then it’s too easy to make decisions that “feel good in the moment,” but aren’t really supporting your long-term vision. It’s too easy to make decisions because you have a sense that you “should” do something; or to make decisions because you feel guilty about what you have or have not done with your money in the past.