Society is beginning to realize that Middle America is shrinking rapidly while those with money are just getting richer. So what are they doing that we are not doing. Their money is making money. There are five important blocks in building a strong financial foundation. Increasing your cashflow, proper protection for your family, eliminating debt, emergency fund and investment. Building a solid financial foundation is like constructing a building, you must start from the ground up.
Most people want to start right off in stocks and bonds. What we don’t realize is that a builder doesn’t build the roof first. Dividends are paid on a yearly basis unless there is an interim payment. Treasury bills have three tenors 91 days, 182 days or 364 days. Bonds have even longer tenors. But what happens when the stock market drops. Right you lose money. My dad owned his own construction company so I understand what it means to start with the blueprint then build the frame. What is it you actually spend every month? Is it taking your whole monthly salary just to pay the bills? What is it you could do no matter what time of day or night it is? Have you thought about making a business out of it?
Inflation is not going to stop going up. Neither is Corporate America going to stop finding reasons for you to shop. Building an alternative source of income will make provisions for your monthly expenditures. Take a look at your W-4 and your state withholding. On the federal look at page 1 and page 2, you may be giving Uncle Sam more money than what you have to especially if you get a refund every year. Yes refunds are nice and some people think of it as a savings plan because they choose not to be disciplined enough to do it themselves. So let me ask a question right here. When you give Uncle Sam that extra money during the year and the government takes that money and makes some more money drawing interest off of it who gets the interest off of your refund? Exactly!!! Uncle Sam gives you the principal not the interest. The content of your cashflow is so very important. You’ve found a business you can really sink your teeth into and you’ve committed yourself to working it. You’ve changed your W-4 and you’ve got more money coming in. If discipline is your problem then alot a certain amount to a different account and assign that account to paying off debt. Now you’ve got a business making extra income that you are working to cover your monthly expenses and extra money paying off debt.
You should have up to six months of monthly expenses saved for emergencies and insurance protection to cover health, unexpected accidents and death. Now you are ready to invest. Whether the stock market goes up or down your foundation is strong and the content of your cashflow never stops.