We live in a world where everything is changing fast including the financial world. There are new developments every day and for one to stay relevant, there are certain money moves one must take. Money moves are those deliberate financial decisions you take that can have a great effect on your financial life either now or in the future. These moves can influence how much money you make, how you spend your money, and how you keep your money and in this video, I will share with you 5 money moves you must make in the new financial world and if you’re new to the channel then hit the subscribe button below for more life changing content!
Move #1: Maintaining An Emergency Fund
I’m almost certain this is not the first time you are hearing of having an emergency fund and in the new world where more uncertainties will certainly arise, having this type of fund set up is imperative. For those who are unfamiliar, what is an emergency fund and why is it important? An emergency fund is money set apart for unforeseen circumstances that carry financial consequences. An emergency fund is important because it keeps you stable in times of need. It keeps you from debts as you don’t have to borrow money to meet your financial needs during that period and, as I mentioned, it has never been more important to have an emergency fund than now.
Maintaining an emergency fund is an important money move you must make in the new financial world. No one wishes for bad things to happen but there are uncertainties and things can change overnight. You can lose your job, or your investments may drop in value or you can even be the victim of a natural disaster. Emergency funds prepare you for these challenging times and make you ready to face what is to come.
It’s worth mentioning that about 50% of people don’t have any amount saved for an emergency. Either because they don’t see the importance or because they find it difficult to maintain an emergency fund. Ideally, an emergency fund should be between 3 to 6 months of your monthly expenses and for those who are more risk averse I recommend stashing away a year’s worth of money.
If you don’t have an emergency fund the first thing you should do is grasp the importance of having cash set aside for unforeseen events. Then, you should start saving money even if it is just in small amounts as something is better than nothing. You should have a budget that outlines what your monthly living expenses are so that you can save up enough money to ride out any unfortunate event!
Move #2: Building Non-employment Income Streams
It has become more obvious now than ever that if you want to attain true financial freedom, you cannot rely on one source of income especially if that one source is from employment. Now, there is nothing wrong if you are working for someone. It may be your dream to work in a particular organization and build a good career but the truth is that when it comes to your financial needs, having just one source of income may not be enough in this new financial world. There are people who make a lot from their salary but you will agree with me that for one person living comfortably on their salary, there are several hundreds of people whose salary is not enough to sustain them. Therefore you don’t have to limit yourself by having just one source of income.
Building non-employment income streams is an important money move in the new financial world. It gives you financial freedom and it is also a means of creating wealth. The good thing is that you can start building a non-employment source of income along with your full-time job as a side hustle. There are several ways to build these extra non-employment income streams.
The easiest way is to start a small business along with your full-time job. Think you don’t have the time? Chances are you do but you just aren’t aware of it yet. There is always enough time, you just have to create the time. You can start a small business that you can build during the evenings and weekends when you are not going to work. For example, you can offer your skills as a service online as a freelancer, start a YouTube channel or create a SaaS product. If you are skilled in graphic design, writing, web designing or any skill you can think of there is a likely market for you on the internet. Just tap into it because the internet is wide enough and the potential for earning is unlimited since you can connect with virtually anyone from any part of the world.
Another way is to invest your money in real estate and hire a property manager so that it will not eat into your already limited time. You can buy vacation condos and rent them out. But maybe you are someone with a lot of knowledge in a particular niche. If so, you can turn this knowledge into cash. For example, you can create an online course and sell it online.
Needless to say there are tons of ways to make money online and by adding new streams of income, you avoid the risk of having no income if you are let go from work which is always a possibility in this new financial world.
Move #3: Contributing More To Your Golden Years
Your golden years start when you retire however you must start making plans for these amazing years well before you reach them. When it is time for you to retire, money is the last thing you want to worry about. Likely, you have worked for years and you just want to kick back, relax and enjoy the fact that you never have to work again.
Now, there are other things that will matter to you more in your golden years but we cannot deny that money is what will determine the longevity and standard of living in retirement. For example, if you haven’t saved enough money, you may have to push off retirement for a few years or retire but have to live more frugally than you would like. It’s for this reason that a money move you must make now is to start planning for your golden years. There are some things you need to put in place to have financial security when you retire.
As a rule, you should have up to 25 times your annual living expenses saved for retirement. The best way to save this amount is to start saving early. Have a budget and spend less money than you earn to be able to contribute more to your retirement accounts. Use a compound interest calculator to determine how many years and at what contribution rate and interest rate you will need to invest at to retire at your target age. Then, make a retirement plan and bide your time until the plan unfolds!
Move #4: Assessing The Longevity of Your Current Industry
Just imagine if you were in an industry selling typewriters when people have already moved onto computer word processing. I don’t know what you would do to sell your inferior product but I believe that your chances of keeping your business afloat would be quite low. So the question is, how relevant is your current industry going to be in the years to come? Effectively, what is the longevity of your current industry?
The world is changing fast and new industries are coming up every day, pushing older businesses into extinction. Advancements in technology are changing the way business is being done in this new age. The rapid increase in the rate of communication and information transfer is also making businesses grow rapidly. If your current industry is to remain relevant then it has to keep itself up to date.
For example, the world is moving from the old form of advertising to digital advertising. This does not mean that the old form of advertisement in newspapers, billboards, radio, and TV is dead but the number of people that rely on those sources for their information are not as many as it used to be. Today the internet has changed the way marketing is being done. You can easily market your products on the internet at a cheaper rate and also have the potential to reach a wider audience and also the audience that matters.
If your industry does not have an online presence yet and they are not connecting with their customers on social media, they may not last for long. Your industry must be flexible and be willing to go where the customers are because the customers are now spending most of their time online. On the internet, you have the option to use videos and graphics. These are more interactive than the traditional advertisement which is becoming outdated.
If you work in an industry that still relies on traditional methods of operation and marketing, you need to make that move now. The future of such industry may not be sustainable and they may go out of the market anytime, leaving you with no job. But if an industry is learning how to leverage new technologies then there may be a future. They can combine their experience and the latest technology to build a great business.
Think of how Uber and some other companies are taking over the traditional transportation system. New ideas are coming up every day and the earlier your industry wakes up to reality the better. If not you should switch to a new industry as soon as possible. There was a time when there was no computer and the enormous work that computers can do are needed to be done by humans. NASA once relied on humans to do complex calculations but most of these mathematicians were replaced by the computer which can do their work faster and more accurately. Watching videos on the internet is now gradually replacing the old method of watching videos. Before you stay in an industry, you must assess the longevity. If the industry does not have a reasonable plan for the future, it is best you make the money move and get out.
Move #5: Investing In Your Financial IQ
The greatest investment you can ever make is to invest in yourself. The returns from investing in yourself cannot be compared with other forms of investment. One way to invest in yourself is to develop and improve your financial IQ. Financial IQ is how well informed you are about money. This shows in the way you manage and handle money.
Warren Buffett who is one of the richest people in the world also agrees with the fact that the greatest investment you can make is in yourself. He found that it is important to develop yourself and that is why he spends a lot of time reading. Most of the richest people in the world today engage in the habit of reading and investing in their knowledge. If you want to be excellent in this new financial age, you have to learn to invest in your financial IQ.
Your level of financial IQ will determine how much money you are able to make, save, and invest. It can be said that a person who makes $50,000 has a better financial IQ than someone who makes $10,000. Therefore, investing in your financial IQ will increase the amount of money that you earn. Your financial IQ will also affect how you budget your money.
Investing in your financial IQ is a move you must make in the new financial world. Staying up to date in the world of finance gives you an advantage and increases your chance of becoming successful. You can invest in your financial IQ by learning from financial books or attending seminars where they teach about finances. Money mentors can also be of use if you can connect with the right ones that will allow you to connect the dots with your finances. The opportunities to learn are endless and for most people it simply boils down to pursuing more education!