Financial Freedom - Know Your Financial Health
This is beginning to sound like the Ten Commandments in the Bible. Well, commandments yes, ten maybe...
To fix your finances, you need to know your financial health. You will need to consult a financial adviser or mentor in the area of finances or if you are a DIY freak, books, to diagnose the disease.
Many viruses attack our finances, but the most common and identifiable virus is financial illiteracy. It has different strains, mild, medium and acute. This is based on the level of violation of laws of finances. Having an outsider to diagnose the disease is the preferred option, as he will likely spot the things we are blind to.
Treatment of a disease starts with a diagnoses. With an accurate diagnosis, you will know from what angle to tackle the problem to fix it. From the diagnoses, you will see clearly how you boxed yourself into the corner you found yourself. Knowing how you got here will determine how to get out.
Can you fill a leaking bucket? Yes, Financial-freedom-momentarily but it will not stay filled. Fixing your financial heath is one of the preparatory steps to commencing the journey to financial freedom.
Without a sound financial health, even if you manage to exit the rat race based on the volume of cash flow generated by your businesses, you will still be in a state of financial insecurity. Your current standard of living will be being fuelled by your current income, not your wealth.
If there is a downturn in the economy or in your business, your finances will go into a tail spin. If the downturn persists, your ability to hang on is compromised by your lack of reserves, and you will be forced to swallow your pride and return to the rat race. You will be like a millionaire footballer sacked by his club who goes back to oblivion, in the absence of another club to take him on.
Your financial health is critical to your journey to financial freedom. The ability to parlay the money that flows into your hands into millions depends on your ability to manage your finances. Your income does not make you a millionaire in the final analysis. Your debt equity ratio does; assets versus liabilities. How long can you last if your main source of income dries up?
Before you make the money, you need to acquire the capability to manage it. You need to acquire financial literacy. Otherwise, you will remain a leaking bucket, an accident waiting to happen?
There are no quick fixes. You have to see a good financial adviser, preferably one who is not sick himself, a mentor, or in the absence of it, good books on personal financial planning.
Then you have to painstakingly go through the treatment. Take remedial action required, and tackle the disease frontally. Part of the treatment involves investment in financial literacy. It goes side by side with the main ?therapy?.
The treatment is determined by the disease, so there is no ?one size fits all? cure. And self medication should be a last resort.