Not Wealthy? Change the Rules!

By Jay Peroni

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:
1. Pay God first: 10 percent toward giving
2. Pay yourself second: 10 percent into long-term savings
3. Pay for necessities: 60 percent into a checking type account
4. Pay for recreation: 10 percent into your fun account
5. 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 percent and save more for the future. If you have a burning passion to change, you will. Otherwise, you will be afraid. Don not 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 are willing to do what is 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.

Author

Jay Peroni, CFP, and author of The Faith-Based Millionaire and The Faith-Based Investor. Jay is also the founder of http://www.FaithBasedInvestor.com, a faith-based investing newsletter and the founder of http://www.ValuesFirstAdvisors.com a firm dedicated to faith-based financial planning.. This articles came from MoreArticles.net.