Overcome Your History
Perhaps you have experienced setbacks from distressed events in your life, such as I did many years ago. Most of us have lived through difficult times that strained our finances.
However, you must not let those events define you. You can make positive changes for growth.
Have a little faith but remember that though the phrase “God helps those who help themselves” is not scriptural it does have an inspirational quality to it. There was a similar lesson in Aesop’s fable “Hercules and the Wagoner”, where a driver stuck in the mud is told to “put your shoulder to the wheel” rather than just praying for help. But do pray for help while you work for change.
Especially if you have had financial setbacks, I hope to help you build a better mindset for money and help with your recovery. Perhaps I can say something that can answer a prayer.
List of Your Assets
Whatever your current situation is, your progress will be easier to measure if you define your starting point.
My message here is to define your assets since assets will be essential to your future financial security.
Therefore, I need you to list your assets. Those would include any cash, bank accounts, investments, land, buildings, tools, machinery, vehicles, etc. AI defines assets as “any resource that you control that holds monetary value and is expected to provide future economic benefits.”
There are additional definitions for you to understand to build your current list and define what you can add to build a better list in the future:
- Ownership: The resource must be owned or controlled by you.
- Economic Value: It adds value to you or can be used to generate income.
- Tangible Assets: Physical items such as cash, real estate, inventory, machinery, and vehicles.
- Intangible Assets: Non-physical items such as patents, copyright, trademarks, and goodwill.
- Current Assets: Assets expected to be converted to cash within one year.
- Fixed Assets: Long-term assets used to produce goods or services, such as land or machinery, which is often depreciated.
You Can Create More
When you are young, you may have very few assets. But, regardless of your age, you can work to add or create more assets. And that is a good mindset to develop.
You can start with a better savings habit. If you are conditioned to living paycheck to paycheck, you may need some time to sort out if you have an income or a spending problem.
Even with a zero-value asset list starting point, you can steadily add to your savings to be able to fund asset purchases in a short period of time. That, of course, is for the more tangible assets.
Meanwhile, you can work on your intangible assets. Aside from the list I gave you earlier for intangible assets, certain skills or knowledge you develop and acquire can become assets to you because they can help you earn income or increase your pay with an employer.
Use your creative mind. Think and Grow Rich, as Napoleon Hill would say!
Value Formula
Keep in mind that the value of an asset depends on if it can convert to cash less what you owe on it. Net Worth is defined as assets less liabilities, on the balance sheet.
When I was young, I often had a negative Net Worth!
So, make paying off your debt a huge priority! You will increase your Net Worth with every payment!
Build a Timeline
To go from nothing to something for your Net Worth by adding assets is a process that takes time. If you are impatient, you must learn to control your frustration. And I suggest you do that by focusing on the tasks at hand, which come from goals you set, and the steps defined to achieve them.
You will have many options so do not overwhelm yourself with a long list of goals. That will make it hard to focus on a few. A few will be plenty to start making improvements.
Though I do want you to make a full list of free thinking, no limits, with every option you think might be helpful, enjoyable, or encouraging. That will become your wish list from which you can draw your working list of goals.
Your work list will become the focus of your daily, weekly, and monthly planning. If you do not put an estimated time for achieving, your list of goals will always be a wish list. Remember to “put your shoulder to the wheel”!
Put a measurable element to your goals, such as how much to do, when to do it, and the steps to complete.
Test your timeline and take measurements on a specified schedule!
Buy and Sell and Consider
On your list of goals, I would like you to include assets that can help your Net Worth and income potential grow.
With your list of assets to add over time, you will have more incentive for a better savings habit. Central to this mindset for adding assets is the generation of more income to be able to add to savings for more assets to generate more income.
There are two side benefits to this process of saving to invest. First, your ability to pay off debt will increase. Second, your options for asset investing will increase. With patience, you can build momentum for a bigger Net Worth and add to your buying options.
Buy and sell is an old investment adage that emphasizes making a profit. However, another useful piece of advice is to add assets that can generate income, which will have a longer-lasting benefit to you.
Produce Income
A job, a business, and creative ideas can be important sources of income. Why stop at only one source of income when all three are available to you?
There are ways to approach this potential without using up all your free time and keeping you from family enjoyment. Your family time must be valued.
We all want to consider ourselves as being resilient and healthy. But we must plan for the worst and hope for the best. It is better to have indirect income beyond your needs and still be able to work. That is an enviable position to be in and most likely much better than the position you find yourself in today.
Income is important. But adding assets that can produce income for building a higher Net Worth potential and life will become much easier to navigate!
Determine Your Needs
I know there are things you want that go beyond what you need to survive. And that is difficult for many to admit. Many budgets become useless because the escalation of desired purchases put pressure on basic needs.
Do not let the reality of selfish behavior get in the way of mature reasoning.
Be honest with yourself. We all want to live better than we can afford. Who doesn’t like to travel, drive a new vehicle, or eat at nice restaurants?
The key to you building assets for financial security is to provide for your needs and earn your wants.
The “More Than You Need” Goal
I have a simple goal for you to set:
Build assets that can provide enough income for your needs and make a job optional.
Who Needs Security
I have observed some people who feel life is an adventure which may or may not end well. And bad habits can help things not end well.
However, working to add assets can be an adventure, with some risks of loss, but can have enough wins to make it worth the effort!
Do you want to leave your income potential to that annual employment review? Did you add enough skills and fulfill the work goals given to you last year?
With AI and the potential changes to employment opportunities, I think adding income-producing assets over time makes sense. How you think about that does matter.
Your attention to your future needs will add a lot to your provisions for financial security.
What Would Make You Feel Secure?
Perhaps this is where I should have started this discussion. What would make you feel secure?
Your list of goals of assets to acquire or skills to pursue might be better defined.
We all want to live a long life, and modern science might make that possible. However, your financial security is unlikely to come from the government. So you might have to depend on your own efforts with the help of a few friends and family members to add enough income-producing assets to give you the security you defined for your future.
Make a New List
After raising that question, you might want to make a new list. Did your previous list address include what would make you feel secure?
I am sure your past financial experiences will affect your list of what would make you feel secure.
And, I have offered some definitions for consideration for what types of assets you will include on your list of goals. But do not let me limit your choices. Use your imagination and expand your perception of possibilities!
Remember to develop a savings habit to fuel your goals!
And note that paying debts off is as good as adding assets!
Use time as an incentive which will heavily influence your progress!
Provide for your needs and earn your wants!
I can see you adding assets to provide a secure financial future. And I will pray you do that!