Beginner's Guide to Personal Finance
First off - Nau Mai Haere Mai!! We've had some exponential growth lately and I am over the moon to be getting financial resources out there for our people to use. Our Mission is to Empower Maori to become financially Independent. So, today I am going to be sharing a 'How You Can Get Started'. Treat this as your manual. Print it off, check each step off and use it! Follow every step exactly.
First off though, if you want to learn a little more about Maori Millionaire, what we are and what we stand for then watch our interview on Te Ao Maori Television:
Anyways, back to the kaupapa: How you can get started.
I have a simple process. There are 3 steps which you need to follow to start your financial journey. But, before you start these you need to set a goal. For me, my goal is financial independence. What this means is that I am not reliant on any person, any job, or anything in order to keep me going. What this means financially is that my passive income is more than my living costs. So, if I want to take a week, month, or year off work - I can. In saying this, at this point in time I actually enjoy working. I feel passionate about my work at NL Lawyers because I feel like I am making a difference. I work in the Waitangi Tribunal Team where we take claims to the Waitangi Tribunal against the crown in respect to the failings of the crown to adhere to the treaty of Waitangi, or, the principles of it. So, my goal is financial independence. What this means is that if at any point my health (mental or physical) becomes an issue, if I am no longer enjoying my mahi, if I have other commitments which require my time - eg. tamariki or whanau, then I'd like to be able to leave work. I never want to be working if it is detrimental to my whanau, health, or self. If I need time to reconnect with Te Taiao, then I want to do this without the worries of money.
So, for you - you need to set some goals. This goal needs to have a vision behind it, a why and many reasons for it. Some examples are:
You value time with your kids and don't want to be an absent parent.
You love travelling and want to travel multiple times a year.
You have health conditions in the way of you working.
You grew up poor and don't want this life for you or your children.
You have mental health problems and can not be adamant that your mental health will be safe in any work environment.
Write your goal and your reason on to a piece of paper. Stick it to your door, a mirror, your wall - anywhere which you will see often.
Get your phone, write in a note your goal and make it your screensaver so that you see it all the time.
So, once you have a goal and a reason for this - you will be ready for step 1.
Step #1 - Saving an Emergency Fund
The first step I always recommend is to save an 'emergency fund'. Emergency Funds are really important because when unexpected costs arise, they wont cause you to go in to high interest debt that accumulates, digging you in to a whole that grows deeper and deeper.
What are the things that will be covered by an Emergency Fund?
You accidentally spill a coffee on your laptop and need it for work.
Your kid comes home from school and you realize that they need a new jersey as it doesn't fit.
Your cat becomes sick and needs an operation.
You have one pair of work shoes and they break.
What is it not for?
Going out to dinner.
Going on a holiday.
Buying a new handbag.
You have to be disciplined with yourself in what this fund is for, and not for.
Save $1,000 in this savings account. You will need more if you are responsible for more people. If you are a student with no dependents, you won't need as much. It's a personal decision how much money you keep in here.
Keep it in a separate bank from where you do your every day banking. This will ensure that you will not dip in to it for other activities such as shopping sprees. I do my usual banking in Westpac and I have my Emergency Fund in Kiwi Bank.
Step #2 - Paying off Debt
Consumer debt can be one of the most debilitating things in adult life. A feeling of never ending payments and continuing struggle is common amongst those with large amounts of debt. There are different reasons for entering in to debt such as needing money for emergencies, or others that chose to go in to debt to live above their means.
If you have debt at a variety of providers, for example 2k credit card debt, 3k for a laptop at noel lemmings, $1500 at a loan shark, etc, etc - I think that the best way to manage this is independent to you. There are a few different ways that you could do this, including:
Debt consolidation - This is when you get one personal loan and use the money to pay off all of your debt at all the different locations. The perks of this is that the interest rate will be one rate and not mixed. The con of this is that you may find yourself spending more money on interest. Sometimes, the extra cost is worth is because you find it easier to pay one bill than become overwhelmed with several.
Organizing your debt from highest rate to lowest and start there.
Organizing debt from highest amount to lowest.
Organizing debt from lowest amount to highest.
Step #3 - Research
Research and becoming educated in finance is one of the biggest down falls amongst many people. One reason for this is because it is not taught in school and a taboo topic amongst a lot of people. Here are the topics I would research to start off:
assets v liabilities
On top of these topics, I would also recommend reading the following books:
Rich Dad Poor Dad
Cash Flow Quadrant
How to Win Friends and Influence People
The Barefoot Investor
The Millionaire Next Door
Here are some book reviews for these books:
Your Money or Your Life , The 4 Hour Work Week , The Millionaire Next Door
If you can't afford to buy a book, borrow one- or go to the library! Have no excuses.
Who you surround yourself with is very important. If you hang out with gang members you'll likely become one too, if you hang out with millionaires so too will you become one. If the people you surround yourself by in real life aren't people working on their money mindset or personal growth then create a solution. I use online resources to find friends for this. Start by doing this:
Follow Maori Millionaire on Instagram and DM me ' Group Chat ' to be added to our exclusive group chat. Here, we discuss new ideas around investing.
Join the Facebook Page for Maori Millionaire to do the same.
Find a community for finance
As part of Step 3, research needs to be wide and far. Learning about finance is like learning a new language. It involves time, commitment, and energy. But, the rewards for doing so are astronomical for not only you but for your children and the whole line after you. So, get your crap together and start learning.
If you are lacking motivation read this.
There are some topics which you must study. These are significant to your understanding of finance as a whole. These topics are down below. If you click each topic, it will take you to relevant information regarding it.
Note how not once did I mention to not buy that cup of coffee, new hoodie, handbag or anything like this? In order to become financially independent, you do not need to live a life of misery. You can be happy whilst growing financial independence. This is the concept of value based spending which encourages analysis of your purchases to decide if it really gives you value, and to rethink the purchase if it does not. For example: I no longer buy takeaways as it provides no value for me and I don't want to spend my money on something which doesn't add anything to my life.
If you're on the opposite end and wondering where you will get the money to invest or save, because you currently live paycheck to paycheck and have no spare money - then this article will be for you. It is much easier to increase income than to cut all costs.
If you have questions, then reach out. I am here to help. I don't get paid money to run Maori Millionaire I am doing this because I want Maori to become financially independent. I believe that through financial literacy, financial independence can be reached which can improve the quality of life we have. So, reach out - I am here to help!