The 3 Must-haves for Financial Security

Everybody wants financial security. With so many temptations where to spend our money, it can get frustrating not knowing where to start, what to prioritize.

Let me make a suggestion that has worked for hundreds, even thousands of years according to The Richest Man of Babylon (by the way that's a parable that ain't!)

I'll make it easy for you. Let's go back to basics. Before you think about investing make sure you have your foundations right first. It's like building a house: there's no point starting with the walls, the roofs windows and so on, until you have dug and built a good foundation to make your house stand, safe, sound and stable.

Here are the first 3 things you must have: the 10-0-6 back to basics foundation for financial security.

10 - Save 10% - pay yourself first! Immediately put 10% of your earnings into an account for Future You. This is your freedom account. Regardless of your financial situation, do your best to pay yourself first. Automate immediate transfer of 10% of your income or salary into a time-deposit or a separate savings account that you don't touch until after 5-10 years (or until you have clarified your long-term investment goals). Only after you've done that, then pay your bills, pay your debt, etc.

0 - Zero debt. Make sure you prioritise clearing your debt. There is good debt and there is bad debt. Good dent is the kind of money you borrow to buy income producing assets. For example, buying a property with rental income that pays off the mortgage is good debt. Buying a business that gives you enough revenue to pay for the loan and still have left-over profit, that is also good debt. Ideally, before you even think about leveraging or borrowing money, make sure you have no debts. Live simply. Live frugally.

6 - Six months.  Set aside 6 months worth of your salary as emergency fund. Redundancies can happen. Businesses close. The economy can be a bitch. You can lose your job even though you are very good at what you do and your performance is exemplary. As they say, nobody is indispensable. So make sure when the unexpected layoff happens, you have funds set aside to tide the loss of income. Better yet, buy income insurance.

Once you have these basic foundations, then you can start re-assessing your financial situation. I promise you, once you have achieved these foundations, you will begin to have a different mindset and start to experience more prosperity in life.

Achieving financial security is like learning how to walk: you stumble, but just keep getting up and keep going. We all learn how to walk before we can run! One step at a time: remember 10-0-6!