There is one serious issue which has been bothering my mind for sometimes now. This issue is the wrong perception most people have about their financial status. Generally, people equate having a good high paying job with being wealthy. Consequently, they have a wrong perception about their financial status. And to compound the problem, people around them also have a wrong perception about the state of their finance. Family members, friends and people in the community call you the big boy just because you have high paying job. But in the real sense, are you really a “big boy”? Have you ever carried out a personal assessment of your financial strength? Please note that, while carrying out the assessment of your financial strength, you need to realize that wealth is not measured by your current level of income, it is measured in time. How long can you maintain your current lifestyle without your job? Having high paying job does not mean you are wealthy, neither does it guarantee that you are going to be wealthy. It only gives you the potential to be rich if you manage the income well.
Most people have the illusion of being wealthy; meanwhile they are only one pay check away from serious financial crisis. Unfortunately, they only face the reality when something happens to their job. This often is always a very painful experience. This is what happened to most of the bankers who lost their job recently. They did not know their real financial status until they lost their job. They were living with the illusion of being big boys which was far from the truth. Therefore, it is very important to do a self assessment of your finance to know what exactly your financial status is. The self assessment is very simple to do. All you need to do is to answer this question: “How long can I maintain my current standard of living without my job?” The answer to this question will give you an exact picture of your financial status. It is however, very important to make it clear that your knowledge of your real financial status alone is not enough. Knowing your real financial status is just problem identification. It is just the beginning of your transformation from living a life which most likely will lead to financial catastrophe. Identifying the problem does not solve the problem; knowing what the problem is only equips you to come up with efficient and effective solution. Then, what this means is that, you must do something to solve the financial problem and turn the tide in your favour.
What do you do?
Once you have realized that contrary to your believe, you are not really a big boy. The first way out is to establish a plan B as soon as possible. The plan B I am talking about here must be given a serious attention. It must not just be a plan; you must start implementing the plan while you still have your current job (your plan A). This is another common mistake people make. They only have their plan B either on paper or worst still in their mind. The problem with this approach is that they have a plan B which has never been tested. Hence, they only find out the problems with their plan B when it is too late. That is, when the plan A has failed them. As a matter of fact, certain percentage of your current income should be dedicated to your plan B. Another thing I need to point out is that, having plan B is not only meant for people who are employee. Everybody whether you are an employee or you are running your business must have a plan B. In short, let me say it clearly, you need multiple streams of income! Having multiple streams of income is the secret of financial survival. Don’t forget, the kind of ‘Sanusi Tsunami’ which hit the banking sector can strike any sector of the economy.
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