Simplified Budgeting

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Increased Financial security comes from multiple income streams not a bigger pay cheque from your employer.

The world has changed. Make no mistake about it. It has changed irrepairably and forever. The ongoing fallout from the Global Financial Crisis means it no longer matters how much income your current employer pays you. You are still going to have a deep sense of foreboding and unease about your financial security, your family’s and everyone else that is dear to you.

So how do we ease this foreboding and give ourselves the peace of mind that we need to move confidently into the future.

There was a time that we thought getting more education increased our security but we now know that even some of our brightest stars have been left on the scrap heap while their employers scramble for the doors and batten down the hatches of their businesses.

Longevity and experience within a company or industry now has little direct correlation for the welfare of your family.

And so the responsibility for the success of your family is once again set firmly back on your shoulders.

And for a lot of people, especially our younger generations, a real need to understand where our dollars are spent has been forced upon us and many for the first time are tracking cash flow and organising budgets.

Establishing a budget will be covered in future articles but for now understand that for many people, having them write their own budget is akin to having a 16 year old drive a 5,000 horsepower drag car. Some may do ok for a little while but the damage will probably be fatal.

Get professional advice.

So let’s assume you’re one of the people who has been tracking your cash flow and you’ve found a gaping $10,000 a year gaping black hole in your expenditure.

If you think it’s impossible to go backwards by that amount ask yourself if you know anyone that is a chronic refinancer.

That is, every two years they get a new home loan and consolidate all their debt.

Or if they don’t have a mortgage, they’re constantly rolling from one balance transfer deal at low-interest rates to another.

You’ll also notice that when a bank does a balance transfer for you they also “generously” give you an increased limit, just in case you need it. And because you’re scared they may reject your application if you dont accept the increased limit, You sit silently thinking “we’ll only use it in emergencies”but you aleady know you’re doomed.

You now have two choices.

You either reduce your expenditure by the missing $10,000 or you increase your income by the same amount plus tax.

For some people, asking them to reduce their lifestyle expenditure is like asking them to pull their own teeth out.

The chances are that a simple request of a $10,000 salary increase for most people will be met with a look of derision and laughter from their employer.

Even if it was possible, the same problem we originally spoke about exists. That is, their entire income comes from one source.

By now you’ll have become aware that I am a believer in having multiple income streams.

Think about it, one of the most commonly spoken about investment concepts is diversification. The ‘don’t put all your eggs in one basket’ rule.

So if it makes no sense to have all your investment efforts in one place why then would you be completely and wholly reliant on your employer or business to provide your income.

The lifeblood that feeds your family, puts a roof over their head and funds the investment efforts previously mentioned.

It doesn’t make sense.

The loaded question i’m going to give you at this point is this. Is it better to earn household income of $100,000 from 2 people earning $50,000 per year each or to have 10 income sources providing $10,000 each. If you’re like me then you’ll agree that 10 sources of income are a far safer way to build your future.

Why? Simple. If you lose your job then half of your financial security has been flushed but if you’re a person with the 10 income streams and one of them dissolves, you need only find a way to fill a 10% gap.

What do you do though if you recognise that you’ve fallen into the trap of having limited income sources and you want to change?

Firstly, don’t beat up on yourself. Study hard and get a good job has been the mantra for generations and in the past, many people were limited in their ability to produce other income streams by the number of hours in a day.

You may have even done this yourself, work one full time job to cover the basics of living etc but have a second part time one that you used to save up for annual holidays or extra luxuries in life.

The amount of opportunities that abound today for the budding entrepreneur are limited only by your imagination, and for the most part much of this is a result of advancing technology. This is a time that allows us to turn our hobbies and interests into cashflow.

So whether you’re a keen traveller and cook who produces recipe books from her travels and sells her e-books online, or you just like the opportunity to get paid for helping others as you do in network marketing then there is an opportunity out there waiting for you.

Like anything else you do in life, set aside an amount of time each week you’re prepared to commit to your endeavour and just start.

There are lots of steps between starting and being successful, including identifying your objective for the endeavour but just starting is a step many never take. This is the time to seek help no matter what you want to get involved with.

I would add one caveat. Undertake to complete just one project at a time. Your focus and energy are depleted enough from your work and family commitments. If you take on too many projects, you risk either not finishing any of them or doing a half arsed job you’re not satisfied with. Keep an ideas book and add to it as you think of new things. This can be a note book you keep by your bed or even a folder on a thumb drive kept on your key ring.

Over time you will produce enough projects to not only make you feel like your life has more meaning but you’ll also be setting yourself up financially just in case it’s you that gets called into the boss’ office on Monday morning and told that you are now surplus to their needs.

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