As a 17-year-old entrepreneur consistently making over $5,000 online every month you will find it difficult to believe that at the end of every month I’ll have very little to depend on save that which I will make the following month. Yet, I don’t see myself as a careless spender because a very small percentage of my income is “carelessly” spent on personal things. The truth is the same thing is applicable to a lot of us, and it is even easier to get into debt for some of us in more developed countries – I didn’t realize this until I started to read more on how to improve my financial life and this article will be giving you tips on how to lead a debt free life as a young entrepreneur.
Know Your Priorities – Forget the Rest
A major fact many of us fail to realize is that getting rich would hardly make a difference in your financial life except you know what you’re doing.
When I was only making around $200 a month I used to think it will be easier for me to save a lot more and have enough money to use if I start making more money, and now at $5,000 online monthly I can see clearly that the more money you have, the more likely you are to spend it.
The fact is people with less money are more careful with how they spend than people with more money because people with less money understand they can’t get everything but when you start having more money you start seeing a lot of cool things you can get, you start moving with people who live “exclusive” lives, and you start spending your money like it won’t ever finish, only to see one day that money has wings, and that it can fly.
A great way to ensure you have enough money to spend from that which you earn every month is to know your priorities. You need to understand that you can’t get everything you see and that money shouldn’t just be spent as you have it. You need to plan your spending carefully, and this also means you have to be careful about “impulse buying“.
What is it that you really need? What is it you can’t do without? Or as an entrepreneur, what will help increase the chances of your business succeeding? These are questions you should always ask yourself.
Once you know which things are the most important to get in a given month, put them on the top of your list of what to get and try as much as you can to weed out those things that are less important.
Don’t Use a Credit Card – Only Use a Debit Card, or Nothing
Do you know that as at 2010, in the US, each card holder has an average credit card debt of at least $5,100?
Do you know that as at 2008 a single card holder has an average of 3.5 credit cards?
Do you know that as at 2011 the average APR (Annual Percentage Rate) on a new credit card offer is 14.83 percent?
Credit cards are attractive, in fact, they are the norm but the truth is we can do without them. It usually seems like your credit card is always there to help when you are in need of something and just can’t afford it but the question is why do you even need what you can’t afford in the first place?
Our credit cards come with a lot of hidden charges, they make it easy for us to buy things we don’t need and the end result of this is us going into debt at the very first chance possible. Instead of having a credit card, why not restrict yourself to buying only what you can afford and why not save what you’ll otherwise be paying as interest?
If you want a card at all means, maybe to pay for online purchases and do some other related things, why not get a debit card that restricts you to spending the amount you have. By having this you will be sure you owe nobody and you will be able to avoid hidden charges at all cost.
Focus on Generating More Income Instead of Reducing Your Debt
It’s good to look for ways to reduce your debt.
And, it’s even good to learn as much as you can regularly on being debt free.
But the fact is, how can you be debt free when you have very little to live on?
Instead of thinking always about ways to be debt free, ways to plan your income and things like that why not give more attention to earning more money? This can be in various forms, which can include selling part of your time for money, working on creating passive income streams, leveraging the power of others who have the money you need and learning about other pretty cool ways to increase your income.
It is good to manage, but it is better to create.
It will be easier for you to live a debt free life if you have enough money to spend than if you only make a fraction of what you should be making.
Have a Monthly Spending Limit
If only everybody in debt could have a monthly spending limit, it would have been very difficult for them to get into debt in the first place.
The main reason for getting into debt is living on something other than ours, and this can easily be prevented if we could learn to manage what we have.
Always ensure you limit your spending every month as much as you can, which means you should NEVER spend more than you earn in any given month.
I will personally suggest that you do your best not to spend more than 70% of your personal earnings in a single month because by so doing you will easily prevent yourself from going into debt while at the same time having enough to save.
There are countless ways to prevent yourself from getting into debt but the best thing you can do is educate yourself. There is a lot of free advice online in the form of blog posts, online articles, newsletters and the likes. Ensure you subscribe to reliable blogs and newsletters. Ensure you invest your money and time into reading highly informative books on money management.
You might not have a million dollars, and you might not be able to get the best financial planner or advisor but the little information you can read on many blogs and books will save you a fortune!