Factors To Consider Before Acquiring Financial Fitness - II

The first step is making yourself financially confident by empowering yourself to construct an efficient money box. It is not about getting rich instantly rather it's about building a system that would allow you to be hands-free for most of your time. Just little tweaks twice a year and you'll be good to go. 

This is not going to be an easy task and demands patience. For starters, your fully functioning money box will take 6-months to construct. But it's worth all the time and patience. As this money box will empower you in financing all the necessary things and also save for the long-term goals. Once constructed, the money box will work on its own demanding minor tweaks once in a while. Sounds like a win-win situation, right?

Let's agree on one fact - the needs and situations of every individual vary. Therefore, to achieve your financial goals even your roadmap should differ. 

All of us know the importance of spending money according to a 'Plan'. And most of us would have framed a plan at least once in our life and failed as well. It is simply because of an incompetent cash flow system. As mentioned previously, your fully functioning money box will take at least six months to construct.

"I don't know where my money goes!" 

It's such a repetitive phrase that we have heard from so many people. It's a high chance that even you would have uttered these words at least once in your lifetime. And you are not to be blamed. It's indeed hard to keep a track of every penny spent. There are so many expenditures Rent, EMI, Insurance, Fees, Monthly consumption bills, travel costs, food bills, and the list goes on and on.

One friend of mine a fine artist and an interesting personality Aayushi Seth faced the similar issue. She just didn't know where all of her money swept away every month. Usually, we don't talk about finances as we have so much other enjoyable stuff to talk about. She always has a bunch of work-related stories. Being a freelancer, she works on a project basis and every assignment brings a thrilling experience. She has been working as a professional photographer for years but when she checked her savings, she didn't have much. My highly motivated friend came to me and said "I want my money life on track. Just tell me how and I'll do it!" To be honest, that's the attitude you need to have if you really want to have financial stability.

In today's industry of freelancers, keeping track of money has become even more difficult. If you are a salaried professional, you know that by the end of the month you will get an assured sum of money. Well, the money comes and vanishes away as well. At least a major part of your monthly income arrives at the expected time of a month. But a Freelancer works from project to project. There is no fixed date for the inflow of money for a freelancer. But we can't let this factor become an obstacle on our way to financial stability.

So the problem that Aayushi Seth faced was that she couldn't save much. She has a decent monthly income and more than enough to have a good amount of savings as well. And not just Aayushi, all of us have a surplus amount to save. Our lifestyle is directly related to our income. From an Auto Rickshaw wala to a business tycoon, everyone has a surplus amount. We just don't know how to look at it. Basically, to save and invest your money, you need to have an effective cash flow system. You need to change the way you look at your income. Think of your monthly cash inflow as water flowing in a big river. Now, this big river needs to have some tributaries for the proper allocation of water all over.

Saving is that portion of income that is not consumed. This theory is taught to 12th standard economics students. Now the real question is how to get the savings done? 

Every month, money drops in and so are the expenditures. Talking about the monthly expenditures I have rent to pay, EMIs are debited, fees, home-helper salaries, electricity and water bill, DTH and mobile recharge, monthly ration, food consumption, and travel cost is a never-ending expenditure. So are the lifestyle products and services such as clothing, accessories, salon, trending gadgets, etc. Since childhood, we have been taught to write down day-to-day expenditures for efficient budgeting. But that practice seems troublesome and boring. Think of recalling and writing your expenditure every night -

Travel Rs. 150 

Lunch Rs. 250

Coffee Rs. 100 

Milk and Bread Rs. 75

And repeating the same thing every single night.

This can result in only two things First, you get so bored that eventually, you stop this practice after 1-week maximum. Second, now you think before spending even on day-to-day expenditures such as tea or coffee. Will you be able to enjoy your coffee or movie when you are aware of the fact that you are supposed to write it down? I highly doubt. 

There are many applications available online that can help you in tracking your expenditures and maintain discipline. But if this practice sounds tiresome to you then you must opt for a Cash-Inflow system. The Cash Inflow System is an essential part of your money box. It is a systematic approach to determine the inflow and outflow of cash. By following this approach, you will be able to separate your savings from your expenditure. And this is important.