Saving Money: How a Long Term Financial Focus can Create Wealth

As a society, our financial outlook is more often than not limited to only the short term. We make decisions living paycheck to paycheck, or simply on a weekly basis.

Even many people who don’t need to live waiting for payday will still treat their financial situation as if the money they have is just meant to push them through the week, only to start at zero right before they reload.

Money has no intrinsic value anymore and is viewed more as a tool used to get what we need or want in the short term and not as something that is able to create real, tangible wealth in the long term.

What we need is not just money, but wealth:

The tragedy in living with a short-term financial focus is that we lose the vision for what it means to create wealth. This can even lead to the belief that you can’t create wealth, or that wealth is found by just being able to snag a better paying job, so that you can buy more of what you want between paychecks.

Make no mistake; with a long-term focus, wealth can be created by those in average or even low income situations.

What you make isn’t the biggest factor in whether or not you can create wealth. Instead, it has far more to do with how you use what you earn.

The question is: When you get your paycheck, is it already spent, or do you have the ability to divide it up and put it to work for you?

What we do with our paychecks:

It’s true that our money is (and should be) used to pay bills and even to entertain us. There’s nothing wrong with that. However we need to make sure that we keep our bills and entertainment tabs low enough so that our money isn’t beholden to those expenses week in and week out. This begs some thriftiness on our part and can often requires some adjustment if we hope to move to a long term financial focus.

The amount you cut down can only be determined by you and your budget, but once it’s all said and done, you should be able to do the following things with your paycheck:

• Your paycheck should be safe, and not urgent. – Are there expenses waiting for your paycheck the same why you are, or do you feel like your check is being snatched out of your hand before you get it? This is a bad sign, and it probably means you’re stuck in a short-term financial cycle. Instead of owing your paycheck before you have it, that check should not be urgent. Instead it should serve as reinforcement to your bank account.
• You should be able to pay yourself with your paycheck. – By this I simply mean that you should have money left over to put in savings, stow away in a rainy day fund or set aside to get ahead on next month’s bills. If your entire check is spent before you have it, than the only person who’s not getting paid, is you.
• Our paychecks should help us in the long term. – When you get paid, your vision for that paycheck should transcend week to week expenses. Now I know that those expenses are important, but if they’ve been kept in their place and within your budget, there should definitely be money left over to plan for the long term.

Motivated for the long term:

Saving money from your paycheck is a slow process, but you should be motivated by goals and wants that you might have for the long term. Maybe you want to go back to school, buy a house or pay cash for a new car. Those goals seem unattainable, but they’re very doable for even the average income earner; it just takes lots of a time and lots of patience.

Don’t assume that just because you’re in a lower income bracket that you can’t save money and plan for your long term wealth and success. Wealth is created with hard work, patience and smart budgeting. Doing those things absolutely will free up your paycheck to work for you and benefit you in the long term, just as much as it keeps you going week to week.

Tags: Budget, Expense, Finance, Money, Personal Finance, Poverty, Wealth, Working poor

Category: Saving Money