Your Income Source
Here’s a thought that might scare you a little – suitably so too. How many sources of income do you have and if it’s just one source then what would happen if it dried up? This applies to all income sources, whether it’s your full-time job or indeed if it’s a business you’re operating. What would happen if you got fired or laid-off? What would happen if you had to take a salary cut or if your handful of major clients who make your financial year suddenly stopped sending you orders?
The idea is to shine a spotlight on the importance of diversifying your income sources. One income source is simply not enough, which means you should look towards investments if you already have to work for your money. You can’t have two jobs if each of them requires eight-hour daily shifts, for example, so you’ll have to find somewhere to put your money where it’ll grow and supplement your main source of income.
Your Fixed Expenses
Taking a closer look at your fixed expenses is particularly important because that’s the one area in your life through which the bulk of the money you make exits your possession. Your major expenses pretty much make up your list of fixed expenses, such as the amount of money you spend on fuel when driving to work, how much you spend on rent, your mortgage instalment and/or rates and taxes, etc. I’m sure you can pin-point them exactly, but the issue here is that instead of accepting them as fixed expenses channels you should rather try to flip the script on them and turn them into money-maker channels. At the very least, minimize the costs associated with these fixed expenses, for example do you have extra room to rent out at the property you’re paying off or do you perhaps have space in your car to start a lift-club so that you can save on fuel?
There are so many other creative ways through which one can monetize their fixed expenses, or at least find ways to reduce them.
The general rule of thumb when it comes to what are more-than-essential savings is that whatever it is you have saved up should be able to carry you through at least three months without your regular income. That’s not where it ends however, but rather just a relatively comfortable financial safety-net to be able to fall back on. Otherwise once you have a three-months’ worth stockpile of disposable cash, you should look to the next important financial key-point, which is your investments.
Investments are just active perusals of ways through which money you put away can grow, taking it beyond merely parking it in a savings account. Investments are important because nobody works harder and more efficiently than money which is put into a smart investment. As a hard-working individual, you only have so many hours a day to go and work so that you can earn a bit of money, but money on the other hand can multiply exponentially thanks to financial instruments such as interest, stocks, etc.