Setting Up The Financial Goal and Purpose
“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” – Proverbs 21:5
Setting a goal is very crucial. Have you ever ride a bus or a train without a known destination? If you will simply take the ride, it will lead you nowhere. I have been on that same situation, simply making the journey, taking life as what it offers me. It is only now that I have learned the importance of setting a goal, where I will focus and exert effort to.
It is very important to know where we’re heading and when we’re going to reach our destination, so we can monitor our improvements. By doing that, we can see if we are climbing a right ladder or not, and if we are within the time frame that we’ve set.
My goal is to pay all my debts. And at the same time, I will start building my financial resources. Successful men write their goals, so I wrote the “why’s” and “how’s” of my goals and I will follow it to be free and to be able, to gain back once again my self-respect.
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After reading the book “The Richest Man in Babylon” by George Classon, I decided to use the suggested way to achieve financial freedom, the same plan was used and taught by Jim Rohn as his philosophy. He called it the “70, 10, 10 and 10” formula. This means that for every dollar I earn, I can only spend the 70 cents for my needs. The first 10 cents will be for church or charity. The next 10 cents will be for active capital. And the last 10 cents will be for passive capital.
Jim Rohn quoted, “The philosophy of the rich versus the poor is this: The rich invest their money and spend what is left; the poor spend their money and invest what’s left.” So if I will follow the philosophy of the rich, I should first set aside the 30; then spend what is left.
Let’s discuss further…
THE FIRST TEN – GIVING AND SHARING (FOR BEING GRATEFUL)
I will set aside the first 10% of all my earnings for giving and sharing. This amount will be set aside for serving my God – for offerings, to give back from the blessings I received. God wants a cheerful giver! It will be easier for me to be a cheerful giver if I will prioritize my offerings. I will set aside at once every time I receive any pay, regardless of the amount. I can also use part of this allocation for charity; to share to the less fortunate ones.
THE SECOND TEN: PASSIVE INVESTMENT (PROVIDING FOR MY FUTURE PROSPERITY)
The next 10, will be set aside 10% for me to keep as my earnings. From this allocation, I will build my emergency fund. I have to build at least the equivalent of my three months’ salary. Once I have set aside the desired amount for my emergency fund, I can allocate this part for my active capital to be invested on my own. And in turn, I will be able to put up a business that will generate a generous amount of income.
THE THIRD TEN: PASSIVE BUSINESS (PROVIDING PAYMENTS AND BUILDING BUSINESSES)
The other 10, I will set aside 10% of all my earnings to pay back my debts. Once my debts have been paid out, I will allocate this part to be used for investments that will make more earnings. This is the passive capital to be invested, to make the money to work for me with higher returns (i.e. bank accounts, stocks, mutual funds…)
THE FOURTH PART (70): LIFESTYLE (PROVIDING SUPPORT FOR MY FAMILY)
The remaining 70% of all I earn, I will use to provide support for my family – the rent for a warm shelter, clothes to wear, food to eat, for pleasure and enjoyment, etc. I must live upon this portion and never use more nor buy what I may not be able to pay out of this portion.
Following this allocation, with my discipline and determination, I will be able to finally pay off all my debts and at the same time, build my wealth to gain my financial freedom.
What are you waiting for? Let’s embark now to our financial freedom following the goal and purpose we set before us. If you need someone to work with, I can be of help. Simple drop me a message or comment below!
Here’s to your success!