LBI—Living Below Your Income.

Sequel to our former post, we have been able to establish that LBI is the most appropriate. This is due to the fact that they live within a strict budget; they have a firm financially disciplined life style, they have an organized finances and build up savings by putting aside an amount consistently on a monthly or daily basis, also, they even have wise investment via making extra income on the side line, this is a sure way to being wealthy.

Wealth is built through a disciplined life, I must emphasize that this will not be an easy ride but with consistency, it will become a way of life. You must work with a balanced and tested budget as some budgets are not workable. Have in your budget funds allocated to charity and never spend beyond it in a month and in case you have to go beyond it (in extreme cases) you are having it as an advance from the next month’s quota for Charity (we will discuss budgeting soon). For so many people the major problem is learning to say ‘NO’ and this is key to Living Below your Income, most people I have discussed with say the same thing that is ‘They cannot turn people down’, and what I say is you must be able to say NO especially after exceeding the charity budget for the month.

 Being determined and resolute are key factors in becoming a LBI person, this is due to the fact that financial freedom hinges on this. Being a LBI does not necessarily say you are without loans and mortgages, but, you are comfortable paying your bills and also saving up; It Is Possible. It all starts with a deep determination and an inner strength to kick it off. Its benefits outweighs whatever negativity you might think e.g. people’s opinion  it is imperative to remember that when you live in financial embarrassment tongues will still wag. Why not allow them talk and you live a good financially free life and see your friends take a cue from you as in my case.

Below are great LBI tips:

• ·         Get angry with your present financial state. 
• ·         Write out your financial goals with time line 
• ·         Never spend more than you earn. Make and work with a budget. 
• ·         Do clear out all your small and short debts first before starting savings. 
• ·         Do not make any financial leap be it getting a loan, Investment, getting a credit card, mortgages etc. without first researching about it, always ask questions before any financial decision is made, it is a sign of strength and not weakness. Get independent advice also, most of the time we ask marketers question and we want honest answers from people that are driven by target.
• ·         Taking out insurance is crucial in transferring financial risk (we will discuss more on Insurance latter).
• ·         Should you be in debt get free advice, do not say they are not available search and you will get. 
• ·         Open a savings account for the purpose of Savings and savings only. Do not get a debit card, Mobile or internet banking as this are sure ways of ‘borrowing’ from the account, if possible do not have the bank branch close to you.  
• ·         Initiate a sweep service or a direct debit to always credit the savings account on pay day.

Now, let us calculate our financial net worth as at today, though this is not our final destination, it will help us know where we are and where we love to be. The outcome should gear us up to work more so as to get to our financial destination.

 

Add up your Assets. Typical Assets include:

-          Your home (The house you built or bought not rented apartment)

-          Your Pension contributions (we will also discuss pension in details soon)

-          Salaries and wages due but not have being paid.

-          Your Savings accounts

-          Your Investments (Houses you gave out as rents, fixed deposits, bonds etc.)

-          Any other high value private possessions (land, gold, jewelries etc.).

Deduct any debts (Liabilities)

-          Your Mortgages

-          Your Loans (Personal)

-          Bank overdrafts

-          Due payables (Due rents, due school fee, staff payments owed etc.)

Whatever you get will give you a rough estimate of your net worth.

In simple terms Assets-Debts=Net worth

You can join me in this #personalfinance campaign by sharing this blog with your friends and all that you know. You are also free to ask your questions and you can respond also to other peoples questions and thoughts we are here to rub intellectual minds together. We will start our series on budget in our next post.