Virtually every time I read a business or money book, I instantly relate it to my own personal (finance) situation and how I can benefit from it. Well I just finished listening to Daniel Goleman’s audiobook Focus: The Hidden Driver of Excellence, and thought about how I could apply his thoughts to my personal finances and investing practices.
Focus discusses how one’s attention to detail ultimately dictates how we navigate through life, successfully or unsuccessfully. Its as simple as paying attention. Luckily focus and concentration isn’t something you’re born with, its learnt and developed over time. So there is hope for all of us still!
Focusing on Finances Is Your Path to Prosperity
The ability to focus is a key to excellence, in our personal, professional, and financial lives. I stress this constantly on my personal finance blog right here, that you do not need to be in finance or be a CPA or CFP in order to manage your finances well. In fact, you can do really well on your own if you simply focus on the situation and educate yourself on the topic.
Focus on a Budget
I personally have sharpen my focus on my own personal finances and it has paid huge dividends. I am living proof that if you just start paying attention to your finances, e.g. creating a budget, you can begin to prosper exponentially with money.
Focus on Debt
I feel I’ve always had laser focus on retirement since graduating college. But I wasn’t concentrating on my personal finances as a whole. I had to create a budget to manage my expenses and begin assigning money to paying off my debt. I wasn’t concerned with short term/immediate debt, e.g. student loans, car loans, and credit cards. I was only focused on retirement. If I was saving for retirement it didn’t matter what I was doing in the short term because I thought my long term approach was sound.
Focus on Living Below Your Means
It took me a few yeas before the light went off and I realized I needed to create that budget and begin living below my means. Simply put, that is the only way to achieve wealth (unless you inherit it)…is to spend less than you make and save the rest. And by save the rest, I actually mean save that first, at least 15-20% if not more, then use the rest for your expenses. Follow the old adage of pay yourself first.
Focus on Investing
Once you have the previous steps on personal finances mastered, all you have to do is invest. Take that money you’ve saved and invest like crazy in low cost index funds. Invest in your work 401(k), max out a Roth IRA, go back to your 401(k) and max it out. Then considering investing outside your retirement plans in well diversified mutual funds, like a total stock market index fund or an S&P 500 index fund.
Soon you will be on your way to investing excellence and financially independent.