HOW TO BREAK THE CHAINS OF FINANCIAL BONDAGE

Bondage is a state of being a slave.

There are many forms of bondage in this life, such as physical, psychological, financial, and many more. Today we shall discuss Financial Bondage as many other forms of bondages are related to financial matters.

The BIG question is; How and when do you know that you’re in financial bondage?

Most of us yearn for financial freedom. We have the urge to give the best to our families, but along the way, we commit grave mistakes that always lead us to a particular cycle.

You may have noticed how perfectly you plan for your finances with perfect or near to perfect projects at the beginning of the year. To the surprise of most people, by the end of the year, 50% of their goals are unaccomplished, leaving you with regrets and questions about what may have happened.

You could be making $1,000,000 every year, but if you spend it all, then you will never be a millionaire.

You have a well-paying job or a business with a sustainable income, but it has been more than 10 years, and you haven’t made much progress. If you reflect on your life, you will realize that you’re stuck at the same place you began. To some, it’s even worse because you’re worse than how you started.

You could be making $1,000,000 every year, but if you spend it all, then you will never be a millionaire.

You have a well-paying job or a business with a sustainable income, but it has been more than 10 years, and you haven’t made much progress. If you reflect on your life, you will realize that you’re stuck at the same place you began. To some, it’s even worse because you’re worse than how you started.

You may shy away from facing this ugly truth that you have been doing it all wrong with managing your finances. It’s about time you tackle the elephant in the room and ask yourself this question; “what am I doing wrong?”

6 Mistakes we often make that draw us back to financial slavery

The human brain can adapt to a routine way of doing things. In your day-to-day life, you may have noticed you follow a particular routine, from when you wake up in the morning to when you sleep at night.

It is no different from how you manage your finances every month. There are mistakes most people make that may seem small but cost them a lifetime.

Below is a list of common mistakes that almost every person is making:
  1. Excessive and careless spending
  2. Debts
  3. Credit card mistakes
  4. Living from paycheck to paycheck/ Living an expensive lifestyle
  5. Not having a saving and  investment plan
  6. Having a poverty mentality and not setting goals.
Excessive and careless spending

There is a certain excitement that comes along the moment you receive your paycheck. You tend to be so easy on yourself and spend money on anything that comes your way. You instantly have an urge to go out for coffee with friends (on your bill) every other day of the week.

So there’s a new high-end joint in town? I gotta try that. After all, You Only Live Once, and it’s your money that you’re spending anyway.

Have you noticed all the subscriptions that you pay for but barely use or need?

Eating out with the family can be fun, but it becomes an unnecessary expense to you when done each weekend. Maybe it’s about time you tried a home-cooked dinner every weekend and let all members of your family be involved. You will realize how this will bring your family together while cutting down some costs.

Now, kindly walk with me to your closet. Do you realize how many clothes you’ve bought in the last few months but haven’t worn? And oh, this week, you plan to get that designer handbag that will make you look so classy and sassy at your workplace? But honey, do you need it? The one you bought last month, you used it only once and haven’t used it again because apparently, it’s not what you envisioned it to be.

 I don’t mean to discourage you as you have a right to live a good life. It’s good to make purchases. My fear is if you continue to make purchases that you barely use, you will keep on losing money that you would have used on other things such as mortgages or insurance. Remember, the $20 you spend per week on stuff you don’t need could equate to around $960 per year. Imagine what you could do with it.

Debts

Almost every person who borrows money has a good plan on how to use the money. The problem arises when you borrow money and divert it to other uses not intended. For Example, when you borrow money to buy a new car, you will be paying monthly interest on a depreciating asset.  It could be worse if you’re the kind of person who trades in cars after every two years as this will mean a constant loss in investment every two years.

If you must borrow money to buy a car, ensure that your choice of car is right for your needs. It is also financially wise to consider the cost of fueling, maintenance, and insurance. For instance, it may be unnecessary for you to take a loan to buy a large SUV that consumes more fuel and it’s expensive to insure.

The bottom line is, with a good plan, debts are okay for personal and financial development. Stick to your original intent of the loan, and don’t let excitement sway you. If you are swayed, you will be living in debt, and soon you will become a slave to money lenders.

Credit card mistakes

A credit card will never make you rich. Well, unless you’re the owner of the credit card company. It gives you a false sense of a high lifestyle. It makes you think that you’re now living big.

It has now become the norm to use credit cards to pay for essentials. Almost every person is using it. Most people are willing to pay double in terms of interest rates on various commodities such as gasoline that are gone long before you clear the bill. Don’t fall for this trick as solely depending on credit means that you will pay more for most items, thus spending more than you earn. You don’t want to live on borrowed money month in, month out.

The best you can do is have a written budget for most of the items you need every month. If possible, buy in bulk the items that non-perishable, for fruits and vegetables, you can make purchases every week. Track your expenses with apps such as Expensify- Expense Reports and reduce spending on the items that you least need. Only use the credit card when you don’t have an alternative.

Living from paycheck to paycheck/ Living an expensive lifestyle

How many months can you live comfortably (probably the same way you’re living now) if you got laid off from your job?

Depending on your answer, you can know if you have been living at the mercy of your paycheck. If that’s the case, you may want to avoid an ugly situation that could send you to stress in the second or third month after a job loss.

Jobs are hard to find nowadays, and you will be wise to have some form of financial security to hold on to before securing another job.

It will be stupid of you to work on an 8-5 job for someone else and fail to work on yourself. Start a small side-hustle and let it grow little by little. If you are a good swimmer, offer swimming lessons to the kids in your neighborhood on weekends. If you are a good cook, consider opening a YouTube channel to showcase your talent. You may also sell things like jewelry to your workmates during lunch hour.

The important thing is to have some income on the side apart from your day job.

Lifestyle sometimes is dictated by other factors such as the city and the neighborhood, costs of commodities, and more. Don’t overstretch your income to fit into an expensive lifestyle. If most of what you earn goes to rent, you should move into a more affordable area.

It is necessary to consider other factors such as security and availability of social commodities before moving into a new locality. To complement a comfortable lifestyle, avoid overspending, and adopt a side hustle.

Lack of a savings and investment plan.

Many people do not prioritize having a financial plan. They tend to be so comfortable with the present and fail to plan for the future. Minimize the hours you spend scrolling on social media or watching television and make some time to plan your future.

Having zero savings or investment is like being a foolish farmer who has a bountiful harvest, eats, and sells everything, plus the seeds meant for the planting next season. Just like the weather is so unpredictable nowadays, such is the case with your current source of income.

For starters, you may start with the “50/30/20 budget rule.” whereby 50% of your income should go to needs, 30% to wants, and 20% to savings.

Discipline is a significant aspect of saving. After some time of regular savings, you may consider investing a percentage of your savings. Investing in stock is one of the rewarding ways with good returns on investment.

Having a poverty mentality and not setting goals

More often than not, you have heard of the phrase, “it’s all in your mindset.” What you set your minds to achieving is achievable. If every day you condemn yourself into thinking that you’re poor and you can never make it, then you’re right. But if you speak goodness and prosperity into your life and say you can achieve it, you’re also right. Remember, from the abundance of the heart, the mouth speaks.

The first step is to have a positive mindset, followed by setting achievable goals and giving yourself a timeline. The last and the most crucial step is to have self-discipline and never lose focus.

Remember to set achievable goals to avoid overstretching your income. And because you’re human, consider rewarding yourself with every goal achieved. It feels so good to stick to plan and get what you’ve been waiting for, for a certain period.

Conclusion

Earning an income is difficult, spending it is easy, borrowing is enticing, a borrowed high lifestyle is deceiving, and tomorrow is uncertain.

 Therefore, spend wisely, live a life that you can maintain even after a job loss, budget and stick to it, save for the future, and most importantly, have a long-term investment plan that will give you a flow of income even after retirement.

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Published by @WinnyWrites

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