4 Steps to Self-Sufficiency

One of the many hallmarks of successful parenting is raising a self-sufficient child, such an accomplishment will have you singing “joy, joy, joy” to yourself. Imagine having seen a human life progress from the size of your arm to looking into your eyes as they embark on their life’s journey – you know, life in the wild as a college student, newly employed or a budding entrepreneur. One thing all parents wish for their child is a safe, successful and prosperous life.

Here’s a question, though, what best represents self-sufficiency? What does it mean? We wish it for our children, but what have we done to ensure they’re adequately prepared for this stage of life? Have we shown them how to cook? Have we shown them how to navigate the perils and social ills of society? Have we shown them how to handle their paycheck? What have we done to model his life for our children?

If you’re uncomfortable with any of your answers to the above questions, fear not. Know the other side of that discomfort has proven, “there’s gold in them ‘dere hills.”

Having experienced the pleasure of self-sufficiency, here are four steps that may be helpful for your journey to the “City of Self-Sufficiency.” While the simplicity of these steps may give you pause, don’t be fooled, it’s hard work!

STEP No. 1 – CREATE A BUDGET

If you don’t have a budget, RUN DON’T WALK to immediately do so. Someone has to tell your money what to do. Shouldn’t it be you? A number of people think of budgeting as this ominous task; it’s not. In reality, budgeting is simple. Here’s a formula I often use when creating my budget, 1 + 1 = 2. That’s it. Done. If you’re proficient at addition, you can be proficient at budgeting.

Oh, wait, there is one other thing involved in budgeting. You have to be willing to make difficult decisions. Telling your money what to do and where to go means you have to determine your priorities. For example, you’re walking past a retail establishment and notice an outfit your closet must have, do you purchase or walk away? Well, the correct answer is, it depends. What does your budget say? Did you include a line for personal shopping or “blow money” in this month’s budget? If so, and it’s within the budgeted amount, your closet will LOVE the new outfit. If not, you’re now in a quandary; what monthly expense or bill suffers for the sake of satisfying your closet?

There are a number of apps and pencils available for you to get started with budgeting, The key is, you’ve got to start. As you work through your budget be certain your expenses never exceed your income, and that every dollar is assigned to a category — it needs to be zero-based.

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STEP No. 2 – BECOME DEBT FREE

Lack of debt means your money is your money. It’s a great feeling to have the ability to write a check or (wire) transfer funds for a large (or small) purchase for which you’ve planned. To get there, you’ll want to pay off all debt, which means all monthly payments debt should have a place in your monthly budget.

List your debt from highest to lowest and make note of the monthly payment. After doing so, you’ll want to see if your budget will allow you to pay more than the minimum towards the smallest debt; if so, do it! That extra bit will help you pay that one debt off faster and eventually reassign the total amount to the second lowest total. Maintaining the discipline to assign all “debt dollars” to pay-off debt will provide you with a huge chunk of money when your debt has been eliminated.

Paying the minimum keeps your account in good standing, but it also means you’re paying more in monthly interest fees. The key is to pay down those obligations as quickly as possible, and eliminating them in order of size will allow you to see the benefit of your hard work, sooner. Paying off any amount of debt, especially those with interest rates, will save you money in the long run.

STEP No. 3 – INCREASE INCOME

Increasing your income can occur in several ways. You can review your budget and cut expenses. You can increase your income by securing a better paying job or attaining a part-time or second job. You might even want to sell items you’re no longer using in your home. Yard sales or sites like Craig’s List might become your best friend for a bit. Every little bit helps.

You’ll also want to consider is whether you have an entrepreneurial spirit. Are you a craftsperson? Well, make something to sell. Are you good with your hands? Well maybe become a “handyman” (using the term in a gender-neutral manner, of course). Are you already a business owner? Do you have a brick and mortar location? Is it on a main thoroughfare, near popular neighborhoods or easily accessible? All these are things to consider in order to begin or grow your business. Someone out there is interested in paying you for a skill.

Identifying what you enjoy and have the skillset to accomplish may lead to something that will begin for the purpose of paying off debt, and transition into much more than you ever intended. The key is to think of ways you can temporarily or permanently increase your income. So find something you enjoy doing and get started. In so doing don’t reassign money to pay-off debt to beginning a business, the intent here is to earn more money to become debt-free.

STEP No. 4 – WEALTH BUILDING

Building wealth has a simple formula – SAVE more than you spend. There are several strategies you can invoke in order to save your way to wealth. The first is to pay yourself first – well, actually second if you’re tithing, but you understand. Save a percentage of your income. It’s easier if you have it direct deposited into an account to which you do not have “debit card” access. The purpose is to save money for your distant future, not prepare for a purchase.

If you have investment accounts, 401Ks or IRAs, search for those “hidden fees” and eliminate those you can. These fees could be as simple as a charge for receiving your monthly statement via paper as opposed to electronically. It could be an advisory fee for using an advisor to manage your retirement funds. Maybe using a self-directed IRA will give you a few more dollars to place into your savings account. Using passive income strategies with which you are comfortable can prove very fruitful.

Spending less than you earn and ONLY spending according to your budget is the basic wealth building strategy – did we note saving should be a budget line item? Becoming wealthy takes time. There’s no “get rich quick” scheme that will get you there faster. It will take dedication and commitment to your future self and family.

The intent of the above? TO BECOME SELF-SUFFICIENT. If you follow the above steps you’re more likely than not to experience a much wealthier life than you currently know. The intent is not to “be rich” for the sake of being rich, but to ensure your family has a more stable future.

Similar to preparing our children to be self-sufficient in their lives, we want financial self-sufficiency. Imagine paying for your child’s wedding or education without having to borrow the money? You just ensured they were able to avoid mortgaging your grandchildren’s future. Having children who have the ability to maintain a level of income to consistently meet their needs without depending on others is an accomplishment we all seek to attain.