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As I write the word "Future" in the title, the first thing that came into my mind were my children -- which explains why I chose the photo above. They are my strong emotional why for pursuing financial freedom and why I choose to invest in the future before the present.
As my mentor taught me, there are only two money strategies in the world. And the money strategy that you use determines whether you will become rich or poor in your old age.
The Money Strategy of the Poor
Income - Expense = Tithes and Investments
This formula means that the moment you receive your income, you first subtract your expenses, and then tithe and invest from whatever is left.
Even I used this strategy in the past. I have friends who use this strategy until now. I even hear them say that they will start to invest with whatever is left from their income. And I think nothing is left, because they have not started investing until now.
The Money Strategy of the Rich
Income - Tithes and Investments = Expenses
This winning formula means that the moment you receive your income, you first subtract your tithes (10%) and investments (20%), and then live on whatever is left.
This formula teaches you to invest in your future before you invest in your present.
Millionaires Who Went Bankrupt
The other day, I read an article about music stars who blew millions and went bankrupt. One of which was Lady Gaga who admitted that she was left bankrupt after spending millions on crazy outfits for her Monster Ball tour.
Sixty percent of NBA players go bankrupt five years after they retire. Scottie Pippen earned $120 million in his basketball career, but went bankrupt.
In the NFL, eighty percent of football players go bankrupt after just two years.
Evander Holyfield earned $250 million and Mike Tyson earned $400 million, both of them got bankrupt.
Why?
Because all of them used the money strategy of the poor. Again, it is not how much you earn, but how much you invest.
I urge you to use the money strategy of the rich:
Income - Tithes and Investments = Expenses
If you do, you even get to enjoy two fantastic bonuses.
Bonus #1: No More Budgeting
Until last year, I used to have this cash flow graph wherein I input my income and expenses every month. But this year, I gave up. I realized it was tedious and time consuming.
I've stopped budgeting my money -- the way most people define it. Yes, I still have a list of my income every month, so I am reminded of how God has blessed me abundantly. But for my very simple budget, I just use The Abundance Formula taught by my mentor: 100-10-20-70 and that's just it!
I set aside my tithes (10%) and investments (20%) and live within 70% of my income.
Bonus #2: No More Fighting
A huge percent of couples argue about money. The husband's priority is different from that of the wife's. Fortunately, for a few years now, my husband and I have not fought about money. Even if he sees me buying a new stuff, he does not argue with me about that purchase. Why? Because he knows that I have already set aside money for our future.
Why argue about that? Over time, my husband has learned to trust my financial decisions. During dinner last week, I told him that my VUL from Insular Life can shoulder one of our daughter's college expenses. And that definitely put a smile on his face. He knew that will give him less future expenses to worry about. With improved financial planning, our marriage has become so much better now.
Rule: Invest in the future before you invest in the present.
Ask Yourself: Have I been Investing in the Future Before the Present?
Over time, I have been given the privilege to listen to my friends' and workmates' financial stories. They tell me about their personal struggles with money, how they have been spending it lavishly and left with nothing for investment.
Last week, one workmate shared, "Tulad 'tong relo ko, binili ko ng Php12,000, pero kapag tinitignan ko ngayon, masaya ba ako?" (Like this watch, I bought it for Php12,000, but looking at it now, does it make me happy?) Maybe it gave her joy, but only short-term.
Based from my experience, during the time when I love spending on the latest gadgets and watches, I did not find happiness in those purchases.
Let me share a quote from one of my most favorite books, Tuesdays with Morrie by Mitch Albom, "If you are trying to show off for people at the top, forget it. They will look down on you anyhow. And if you are trying to show off for people at the bottom, for get it. They will only envy you. Status will get you nowhere. Only an open heart will allow you to float equally between everyone."
This is how volunteerism and child sponsorship came in. I found long term joy knowing that I am able to make a difference in someone else's life.
When a friend commends me about my blog, how they can relate to my stories, and how I have inspired them to change their financial situation, I am overjoyed. And that is where I invest part of my money now -- in trainings and books for better financial planning.
I also realized that my random purchases, like using the latest phone or wearing a new watch DO NOT ADD VALUE to who I am as a person. Why? Because these are not real assets. My net worth does not increase with these items. An asset is simply defined as something that puts money into your pocket. Many people are still confused with that thinking that the things they own are assets, when they are actually liabilities, draining money from their pockets over time.
Invest for Your Long Term Goals
Many of the working moms dream of being a full-time housewife. Admittedly, I am one of those. Actually, I share this dream with my kids. That one day, when Mommy is no longer an employee, I can drive them to school everyday, and attend to their needs everyday. I will be like the Mommy of their classmates who don't go to work. (They are from very rich families, by the way.) You may think that doing this will only give them false hopes. On the contrary, doing this forces me to act on this dream every single day.
When I talk to a friend who asks for financial advice, I first ask what will the investment be for. Why? Because as one of the 7 Habits of Highly Successful People says, BEGIN WITH THE END IN MIND. This will give you the direction that will lead you to where you want to be.
Again, invest in the future before the present.
P.S. If you find this post helpful, kindly click the SHARE buttons below.
P.S.2 I would love to hear about your long term goals! Send me an email anytime at jssalandanan@gmail.com.
Be very blessed!
