By William Ballard Last week we talked about how important it is to conduct a weekly financial analysis of your personal finances based off your personal financial statement. That way you are able to really asses where you are and where you want to be in regards to your personal financial freedom -- as well as any areas you may need to clean up in order to get you there. We also talked about how your personal financial statement acts in terms like a mirror, and reflects the kind of person you are on the inside. Hence, the scripture, "Where your treasure is, there your heart will be also." Definitely something we should all keep in mind... This week, I want to take this idea of controlling your personal finances one-step further. We've already talked about how income is senior to saving and investing, and if we understand that idea to be true, then how wouldn't you like to know how to make more than what you are able to spend? The Financially Out-of-Control Thought Process
You see, we've all been told that we should "live within our means," or not to spend more than what we bring in. But here's the thing... Truth be told: This type of financial principle and financial focus is actually detrimental to your ability to produce wealth. You see, when thinking in these terms you are already thinking in terms of contracting rather than in expansion or growth; and last week we learned that we always get what we focus on. Instead of thinking about how to not spend more than what you bring in, and "live within your means," what you should be thinking is how to make your income (inflow) so ginormous that your outflow (spending) will never be able to catch up.
"Most people spend most of their time looking at what they spend rather than what they make. Your way out is through income, not reducing your expenses." - Grant Cardone
Now, don't misunderstand me -- or better yet, misquote me. Certainly, I am not telling you to go and spend more than what you make. What I am advising is that you learn how to increase your income to the point that you will never be able to out spend what you got coming in. Keep in mind, we are talking about achieving financial freedom through CONTROL here. With that said, certainly there are some people out there who will spend as much as they make -- no matter how much they make. These types of people are "out-of-control" with their finances. Grant Cardone's 95/5 Rule
Keeping in mind the idea of how we always get what we focus on, the rule you should always follow when it comes to controlling your personal finances is what Grant Cardone calls the 95/5 Rule. The 95/5 Rule is: Spend 95% of your time and energy on income and 5% of your time and resources on your expenses. Take out your personal financial statement - a statement of your income and expenses, which you should already be keeping a record of if you read last week's article. What you will find in most cases is that the lines for your income will be few and minuet, but the lines for your expenses will be legion. That's the power of income. You see, it only takes a few lines of income space to exceed the many lines of expense space. As we have already stated, the 95/5 rule suggest that you spend most of your time and mental energy on your income capabilities rather than on your expenses. You see, most people have this all in reverse -- they spend all of their time on expenses and little to no time on income or on finding ways to increase their income -- which is why the majority of our country is broke or just barely scraping by. Take a minute and think about how much time you spend on the income side of your financial statement. If you are like most average American families, you're spending the majority of your time on the expense side rather than on the income side. Look, as I've mentioned before, it's not all your fault. This is how you've been taught to look at your personal finances. But from here on out, it will be your fault if you continue to go down this road.
ATTENTION! ATTENTION! ATTENTION! -- DISCLAIMER:
There is some language in this video that all of us here at William Ballard Enterprise do not fully support, endorse, or encourage. From the outset, I want to express my deepest and sincerest apologies before you ever push play on this video. The only reason I am showing you this is because I want you to listen to the financial principles, not the potty mouth that Grant sometimes gets carried away with.
ATTENTION! ATTENTION! ATTENTION! -- DISCLAIMER:
There is some language in this video that all of us here at William Ballard Enterprise do not fully support, endorse, or encourage. From the outset, I want to express my deepest and sincerest apologies before you ever push play on this video. The only reason I am showing you this is because I want you to listen to the financial principles, not the potty mouth that Grant sometimes gets carried away with. In addition to conducting weekly financial analysis meetings, I suggest that, in your meetings, you develop the mental habit of spending most of your time on income (the solution to your financial problems and worries) rather than on expenses. As Grant Cardone advises us in his Playbook to Millions (AFF) program, our target (goal or objective) should be to create enough income in the future that we are then able to save 40% of our gross income. What this will do is force you to think in terms of what can you do to increase your income rather than what can you give up in order to reduce your spending. Look, now-in days, most people are saving no more than 5% of their income -- and that's if they are able to do so without permanently affecting their monthly living situation -- which will never be enough to create wealth and financial freedom. In fact, believe it or not, the average American only has $3,000 in their savings account.
"The supposed finance experts say you should have 3 months of savings because they don't believe in your ability to produce income. Get on the offense (increase income) and stop spending all your time on defense (saving money)." - Grant Cardone
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