Everybody dreams of becoming financially secure, however not many people actually achieve it and this is mainly due to bad money management skills.
Many people have the wrong attitude when it comes to money management and it can have a drastic affect on your financial security.
The very first thing that you should do, which you can do right now, is to analyse your current situation and money management systems.
There are five common styles of money management, the first four of which lead to financial failure, and they are: 1.
To Spend Often people who spend are only living for 'today'.
It is shocking that the average person only has a cash reserve to last them 2 months.
The spenders will never achieve financial security, unless they win the lottery or receive an inheritance.
However, if they do come into money in this way, they will more than likely spend the funds which could lead to more financial hardship.
2.
To Gamble The gamblers are those who are willing to put everything on the line and take on huge financial risk on an impulse in the hopes of hitting the 'jackpot'.
The gamblers take an aggressive approach to investing, they will take on substantial high risk to receive a financial gain.
More than often, gamblers lose a lot of money.
3.
To Speculate Those who speculate make a decision based on a calculated investment risk and they follow what they think is going to happen.
The speculators often make uneducated decisions as to how to make money and will often take on high risk to receive a financial gain.
In most cases, they will lose their investment money.
4.
To Save People who save often keep their savings in a secure bank account and try to avoid the risks of investing at all costs.
The savers are in fact making an effort to increase their financial security, however by avoiding the risk of investing their small interest gains on their savings account will be eaten away by taxes and inflation.
5.
To Invest Investors are those who set aside savings of at least 10% of their yearly income in order to achieve a financial goal.
Investors are willing to accept moderate levels of investment risk to achieve their goals, however they have many strategies in place to hedge against risk.
Sophisticated investors often set aside cash reserves in order to capitalise on an opportunity that may arise in the future.
One key distinction between the different classes of money management styles is that most investors are committed to furthering their investment education and many are also interested in personal development as both go hand in hand.
The next step is to decide to become an investor and use the congruent money management style.
You also need to decide the amount of risk you are comfortable with, will you be a conservative or aggressive investor? The very first step I urge you to take is to sit down and analyse your current position and money management habits.
Make a decision as to how you want to proceed, it is your decision.
Remember that if you spend, save, gamble or speculate, you will only achieve some form of financial failure.
So if your committed to achieving financial freedom, becoming an investor is the way to go.
Nothing ventured, nothing gained.