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Achieving Financial Freedom Is Up To You!

Thirteen Commandments that Lead to Financial "Ifff—ooyyee"
by: P. Meze and Berhane D.

There are so many important matters to attend to in your personal finances that at times it may seem overwhelming. You can't do everything, of course, and you can't do all that you need to do at once. Nevertheless, there are always some things you can do to improve your financial well-being one step at a time. Good personal financial planning doesn't have to be a time-consuming, daily process. We don't promise you financial nirvana, but if you adhere to the following thirteen basic financial planning guidelines, you can enjoy some peace of mind knowing you're well on your way to financial freedom.

1.   Thou shalt be happy with what thou hath got.
"Putting on the Ritz"is the quickest way to the poorhouse. Friends come over to your town? You spend your month's salary taking them from one abesha betto another. Ashagray has a BMW? Then by God, so shall you. Even it means you don't have a penny left at the end of each month and you are eating shebeto injera every night. People who overextend themselves usually do so in an attempt to maintain lifestyles beyond their means. Forget "keman anishay"! The only way to accumulate wealth is to live beneath your means, and the only way to live comfortably beneath your means is to be happy with what you've already got. No more yilugnta.

2.   Thou shalt stop believing that because thy income and assets may be limited, thou can't do any financial planning.
Many people go through life with the mistaken assumption that they don't earn enough to be able to do financial planning. The "Inay? MooliCH yalku deha!"syndrome. Not only is this a mistaken assumption, it's a perilous one. Basic financial planning matters such as insurance, saving, building up investments, planning for retirement, and preparing estate-planning documents apply to everyone, regardless of net worth. If you don't believe me, look around. You'll find your friends, peers, and others in circumstances similar to yours who are doing very well with their personal financial planning.

3.   Thou shalt close all gaps in thy health insurance coverage.
A single gap in your insurance coverage could easily wipe out years of savings and investments, or worse. Everyone needs comprehensive and continuous insurance coverage. You need to be particularly careful to ensure that you have adequate insurance coverage in those areas that are not provided by your employer.

4.   Thou shalt share thy harvest.
Sharing one's blessings, especially financial blessings, is a major wealth-building secret. It's like sowing an apple seed in the ground and months later that seed becomes an apple tree that yields countless apple fruits year after year after year. Especially those of us living in the West. Think of the $20 here, the $40 there we waste on "kelelegn motaleus". How many Brooks Brothers ties are really necessary? How many Kate Spade bags get you respectability? How many Tumi luggage sets ease your voyage? Do you really need a Dooney & Bourke Palm Pilot case? No! No! And No! (OK, maybe the Dooney & Bourke.) And don't think for one moment because your income is limited you can't give anything. It doesn't really matter whether you earn 10,000 or 100,000 (dollars, pounds, or birr, choose whatever currency suits you) a year. The ideal is 10 percent of your annual income. But if things are a little tight right now start small and build it up to 10 percent or more. Then follow your heart to decide where to give or share your money gift. Give and share consistently and prove to yourself the workings of this mysterious law of growth. And check into tax deductible charities while you are at it.

5.   Thou shalt save at least 10 percent of thy income (hopefully more).
It is inexcusable not to save at least 10 percent of your gross income (not net), no matter what your circumstances! If things are indeed tight, just start with 1 percent a month and increase it by 1 percent every month until you reach your desired percentage. For example, month 1 you put away 1 percent, month 2, 2 percent; month 3, 3 percent, etc. By the end of the year you should be saving 10 to 12 percent of your income.

If you say you can't do it, you haven't looked hard enough at how you spend your money. Unless you inherit it or marry it, without saving regularly, you will never accumulate enough money to achieve financial security and independence. Remember, saving and investing money is like sowing a seed. You start with one little seed and then, one day you'll have a tree from which you can pluck fruits whenever you want. Just do it!

6.   Thou shalt maintain a balanced investment portfolio appropriate to thy financial situation.
Most people either take too much risk or too little. The best portfolio includes stock investments, interest-earning investments, and, perhaps, property investments. [SELEDA editors ask: "Uh…what about them pyramids we are heavily invested in?"] Your asset allocation should be considered a long-term allocation, one that is not altered materially in response to current market conditions or, worse, the opinions of "experts".

7.   Thou shalt develop a reasonable investment strategy and stick with it.
Fill your balanced investment portfolio with sensible (some might say dull) investments that you wouldn't mind holding for the rest of your life. Don't jump on the zibazinkay.com bandwagon. Don't overlook the many advantages offered by mutual (unit trust) and investment trusts funds. Above all, be consistent in carrying out your investment strategy.

8.   Thou shalt take advantage of tax breaks available to thee.
Most people pay too much income tax. Save money by paying only the minimum amount of taxes you are legally obliged to pay. (Meaning: not all your ruq zemeds are tax deductible.) You don't need to make complicated (and often money-losing) investments in tax shelters. Do become more aware of the many opportunities there are for people of average means to reduce their taxes. But don't let tax-saving considerations outweigh more important financial planning matters. Rather than asking, "Is this going to save me taxes?" you should ask, "Is this a worthwhile cost or investment?"

9.   Thou shalt recognize that it will cost a fortune to retire comfortably and begin preparing now. Take maximum advantage of retirement plans.
Much of what you do in your year-to-year financial planning is directly or indirectly geared toward assuring you a comfortable retirement. You don't want to be the only schmuck still working in your azawintoch kibeb. Yet many people still fall short. No matter how young or old you are, don't delay projecting your retirement needs and planning to meet them. Take advantage of the many tax-deferred, retirement-earmarked savings plans available.

If you're employed, take immediate action to top up your retirement plan at work. Why? Because if you fail to do so you'd lose the current year's contribution privileges. Unlike the self-employed, you cannot carry back to make up for those years you failed to make the full contribution allowable. But that's not all. You'll also lose out on FREE government contributions and the tax-deferred compounded growth of both your and the government's contribution.

10.   Thou shalt prepare and keep up-to-date necessary estate planning documents (unless thou dislike thy heirs).
If you are one of the many who don't yet have a will (ye sayTan joro ayismaw inna), durable power of attorney, and a living will, by all means ask a lawyer (yes, they come in handy once in a while) to prepare them. Believe it or not, you will feel better for having done so. You don't want a family boxing match to erupt at your elegant yet tasteful funeral. That'll, er, kill the mood. Affluent people may benefit from more sophisticated estate planning techniques.

11.   Thou shalt take control of thy personal finances.
Don't rely too much on others to tell you what is good for your own situation. You know best. You may be very busy with your job and family, but you still need to devote at least some time to managing your money and other financial planning matters. It doesn't take a lot of time and it's time well spent.

12.   Thou shalt get out of debt as soon as possible.
Realise that you can never become financially free if you spend a large percentage of your income towards interest payment on consumer loans. By the time you finish paying off the telescope you charged on your Visa to get a closer look at the cutie neighbour, you could have bought a good chunk of NASA. The sooner you become debt-free the sooner you can devote more of your already limited financial resources to investing in and creating the financial assets you need. Your spouse will thank you, your mother will thank you… your in-laws will still megelamT you at family gatherings, but can now fling your healthy portfolio at them and grin.

Remember, good financial planning begins with common sense. Financial security may still be a long way off, but as you begin to take control of your financial future, you'll find many rewards accompany the sacrifices along the way. Don't get discouraged, and always remember that you are your own best financial planner. Good luck!

13.   Thou shalt get help immediately.
The sooner you act to take control of your financial life, the better of you'll be in control. Why? Because you're dealing with TIME - a merciless master or servant who does not tolerate procrastinators. Once it goes, it's gone forever. Most States in the US have free credit counselling offices. Look them on in the phone book or on the Internet. Get into action and seek out a competent and independent adviser and get the help you need. It will be worth your while!

Patrice Meze is a Values-based financial coach, and founder/chairman of UK-based Wealth Builder Limited and Wealth Creation Centres, dedicated to helping individuals and families achieve the life they have always wanted, but usually didn't know they could have. E-mail Patrice at pmeze@wealthbuilder.co.uk. Berhane D. is being heavily courted by SELEDA.com to be its Chief Financial Honcho. So far, we believe she has better things to do like removing lint from her jacket.)

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