Can you imagine having enough assets so that your entire income is covered by the interest, dividends, or rent generated by your investments? Could you imagine living a debt-free life and being able to take a European vacation whenever your heart desired?
What about being able to give thousands of dollars to charity each month or being able to truly help a person in need whenever they happened to cross your path?
For a long time in my life, I was so broke and desperate that I couldn’t begin to dream of scenarios such as the ones I listed above. I was so far in debt, and so lost, that thinking of having a paid-for house never crossed my mind. I was so scared of getting sued that taking a European vacation (other than to run away and hide) was never a possibility; heck, I couldn’t even save $1,000 for an emergency fund, let alone save up $8,000 for a major trip.
After months of sacrificing and getting my financial situation in order, I got to the point where I felt free. Free to find a job that I loved and looked forward to, not one that I was trapped at simply because they paid me a large salary. Free from the collectors, and free from the pressure of figuring out how to pay all of my bills, while eating and putting gas in the car.
While many believe that financial peace is only attainable once you have large sums of wealth, I discovered that financial peace comes when you have a plan and understand how you’re going to reach your goals.
When I first started coaching individuals and families nearly three years ago, I started the first meeting with them by describing what it takes to get their lives in order and achieve financial peace. It went something like this:
1. Be Content
I don’t care who you are or how much money you have, it’s impossible to have financial peace if you never have “enough.”
If you’re always wanting the “bigger, better, nicer, newer” (fill in the blank), then you’ll never be happy. People consistently speculate that larger incomes coincide with higher levels of happiness, but the truth is that money won’t make you happy.
Being content with what you have, and realizing how fortunate you are compared to other people in this world, is a very important step to achieving financial peace. Reality is that you may never have everything you want, in that case, financial peace will merely be a carrot that dangles in front of you as you continually run on the treadmill of life.
2. Set Goals
If you never have direction or a purpose in what you do, then life will quickly drift away and you’ll wake up when you’re 65 wondering how you’re going to retire. Achieving financial peace – regardless if your definition of it means having lots of wealth, or simply having the peace knowing that all of your bills will be covered each month – will be unattainable if you’re unable to establish a definition of what financial peace looks like to you and a subsequent road map on how to get there.
When I first started on my journey out of debt nearly 6 years ago, my first goal was simply to learn to live on less than I made. Once I accomplished that then it was building my $1,000 emergency fund and then paying off my credit card and personal loan debt.
Now that that’s been achieved, we’ve moved on to saving a down payment for a house, eliminating our student loan debt, and increasing our retirement contributions.
Know where you want to go and why. Having solid goals and a “WHY!” allows you to maintain focus and fight through the tough times.
3. Be Intentional
While setting goals is important, they mean nothing unless you take tangible steps to accomplish them.
Nobody is going to help save for your retirement. Nobody is going to help you budget or make sure your bills get paid on-time. And there is nobody that’s going to make sure you stick to your budget so you can pay that extra $200 on debt this month.
With that in mind, a key step to achieving financial peace is to always be intentional with your finances. Every dollar should be accounted for each month: they should all be spoken for (in your budget), before the month begins.
4. Live on Less, Save the Rest
For some of you this may seem impossible to do. Your budget may be so tight that you’re juggling paychecks, running late on some payments, and trying to figure out how you’re going to buy Christmas gifts this year. For you, it starts with getting on a budget and implementing one of the 4 ways to increase your disposable income.
Living on less than you make means that you never go into debt, again. It means that you’re constantly taking steps forward and never moving backwards. You’re continually saving money in your emergency fund, non-monthly expense account, retirement accounts, and investing for your future.
Reality tells us that building wealth will be determined by your disposable income (i.e. how much you’re able to save each month), but achieving financial peace simply involves learning to live on less than you make each month, while saving the remainder and making tangible progress.
You don’t have to be rich to find financial peace; all most of us need is the comfort to know that our bills are covered each month and there is money left to do with what we wish. Beyond that, if you’re struggling with finding financial peace, then contentment is likely what stands in your way.
The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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