I was brought up in a middle-class family, I know how difficult money is to get and manage for most of us. This is not due to a lack of opportunities, not by a long shot!

The simplicity of economics is amazing and not as complicated as the schools, universities and books make it look. To create financial freedom you need lots of money. Here are a few tips that will help you simplify the idea of economics.

how to avoid money problems

1) Money Shortage Mindset 

Most people struggling with money think there is a shortage of money. The reality is money is plentiful and even when there are shortages we print more. This isn’t some esoteric new age concept but reality – money is everywhere.

2) Spend To Get Don’t Spend To Consume 

Put everything on a credit card or write a check so you have a complete record of every expenditure. Then look at them and notice how many are expenditures to consume rather than to grow your income.

3) Rate Your Expenditures 

Take the last 60 days and rate all your spending on a scale from 1-5, 5 being most important. Anything not rated a 3 or higher should be stopped immediately.

4) Focus On A Financial Plan, Not A Budget

People spend most of their time budgeting the money (defense) rather than concentrating on a plan (offense) to create finances. I spend 90% of my time looking at ways to create income and how to invest and grow money and only 10% of my time elsewhere.

5) All Debt Is NOT Bad Debt

Debt that produces income or builds your value is good debt, contrary to what financial pundits like Dave Ramsey and Suze Orman suggest. Debt that is paid off by others or debt that actually generates income is good debt. If you are not a risk taker, it is probably safe to assume all other debt is bad.

6) Create Emergency Accounts

Add to your financial planning the creation of emergency accounts to take you through difficult periods. This should be funding for at least two to three years.
Bad things happen to good people because good people don’t plan on bad things happening.

7) Pay YOU First

When it comes to money, pay yourself first. Before you pay the house payment fund your savings and emergency accounts. Almost everyone I have ever met makes this mistake. If you can figure out how to pay someone you don’t know at your local cinema then simply add yourself to the list and pay yourself first. Send yourself an invoice each month until you get in the habit of paying yourself first.

how to avoid money problems

8) Sacred Investment Accounts

At the age of 25 years old I set up three investments accounts, one of which was for real estate. I didn’t invest in anything until I was 34 years of age and that account had over 100 months of money in it. When I finally had the knowledge necessary to invest I also had the money to do it with.

9) Correct Income Formula 

To calculate the real income, you need take your monthly Desired Savings + Emergency Funding + Investment Funds + Current Spending. Most people simply calculate their income based on their expenses. This can be a bit overwhelming at first but will give you a real idea that you need to get busy connecting with income.

10) Pay Attention 

Once a week on a set day, I sit down with my girl friend and two children to discuss our finances for 30 minutes. This gets everyone on the same page and demonstrates the importance of having control over our finances.

I came from nothing and figured out how to get my money right. Each of these steps above when put together will force you into one reality – increase your income. Financial freedom is a game of offense, not defense.

Partial credit to Grant.C.