a Hamster Stuck on a Wheel
Have you ever seen a hamster
running on a wheel inside a cage? Hamster wheels allow rodents to run even when
their space is confined. They keep running and running and make no progress.
Yes, they get exercise, but they do not travel any distance. For many, their
finances are like the hamster on the wheel. They keep chugging along, spinning their
wheels, and making little to no progress. Why is this?
Many are programmed to live
life by the rules of the world. Often I see people base their spending rules on
how much income they make. The more they make, the more they spend. The true
reality of wealth creation is that how much you earn has very little to do with
your ability to build wealth. How much you spend is far more critical.
Many falsely believe that the
key to getting out of their financial holes is to add more income. Why, then,
do people who add more income still live paycheck to paycheck? Why do most
lottery winners end up dead broke even after winning millions? If income was
the solution, why couldn’t everyone just find better jobs to make more money?
The reality is that unless there is a change in spending habits, these people will
remain trapped on the same financial wheel–spinning but going nowhere. You must
change your rules.
If you do not like the results,
change the rules. Following the same rules that got you in trouble in the first
place will only produce the same end result. Without a change, you are doomed
to repeat past mistakes. Look at things in a new way. Follow these rules and
you may find financial freedom is closer than you think. (Please note that the
following allocations would apply to those who have already paid down
substantial debt; otherwise, the percentage allocated to recreation could be
dramatically reduced and the remainder used to pay down debt.)
The rules are:
- Pay God first: 10 percent
- Pay yourself second: 10
percent into long-term savings
- Pay for necessities: 60
percent into a checking type account
- Pay for recreation: 10
percent into your fun account
- Pay for freedom 10 percent
into a financial freedom account
Though learning to live on 60
percent of your salary is a tough feat for anyone, it should be your ultimate
goal. If you control what you spend, you will find a way to live within your
means. Reduced spending may also allow you to give more than 10% and save more
for the future. If you have a burning passion to change, you will. Otherwise,
you will be afraid. Don’t let fear get the best of you. Fear may be present,
but work to overcome your fears. If you are willing to do only what is easy,
life will be hard. But if you’re willing to do what’s hard, life will be easy.
Training your own mind is the most important skill you could ever own in terms of
both happiness and success. You should recondition your mind with the knowledge
that spending keeps you trapped in a world of limited financial progress. It
impacts your ability to give and save more.
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