Kaizen is a well accepted business principal that seeks to improve inefficient practices in industries like manufacturing, logistics, and sales. And now Kaizen Tools have been adopted in the other self improvement fields like personal finances.
The self improvement fields include:
- Health and Fitness
- Personal Finances
- Personal Relationships
- Kaizen for Productivity and Business
The Kaizen principal is about focusing on the minutiae. The idea is that one small change makes a huge difference. It breaks down the job or task into multiple process and then evaluates each process for waste or inefficiencies.
The eliminating of waste speeds up your process. The change is then made and will be monitored before proceeding to the next process.
2 Powerful Kaizen Tools
Consider these two powerful tools to improve your personal finances: force multiplier and automation. Both achieve similar results and your risk-tolerance will depend on the tool you choose.
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Kaizen Tools For Personal Finances
Automation is using software to automate and will include automatic transfers. Set up automatic investment for your retirement accounts. Enroll in your company sponsored accounts and opt-in for the yearly 1% contribution increases. Take advantage of your health savings accounts (HSA). These HSA offers tax advantages throughout your life.
Another example of automation is to create an effective spending plan. Capture all your expenses at the beginning of your pay period and monitor it as you go. Plan to tweak your spending plan a few times before you can set it on auto pilot.
I will not be one to tell you can’t have the latte or avocado toast. I don’t believe these goodies will keep your from being wealthy.
Force multipliers can be describe as tools that help accomplish your desired goals. If you prefer to handle cash you can use envelope system to handle your plan. You can plan to keep cash for gasoline, groceries, fun activities, etc.
We started out with an envelope system and would later go to an automated one. The idea was to get comfortable handling cash and understanding how our expenses would fluctuate.
Another example of a force multiplier can be a certified financial planner. The CFP depicts a tool that will amplify your production output, i.e. gains and dividends. Most CFP will not charge an upfront fee but rather they are paid by commission by the investment firm.
Kaizen Tools in Your Retirement Accounts
Automation can also provide net worth building gains. Here you think of diversification through mutual funds, company sponsored accounts, and individual retirement accounts. Diversification will allow you to weather the ups and downs of the markets.
The method can be considered passive income as you don’t have to talk with your broker or review anything. I don’t recommend you completely ignore your retirement accounts though.
Force multiplier is a tool that can help you achieve great wealth but comes with greater risk. Think individual stocks here. If you put all your earnings in a one individual stock the capital gains are impressive in a bull market.
Now when a bear market roars around the risk is great. Stocks in major oil companies, airlines, and restaurant chains have taken a huge loss and have offset previous gains.
The popularity of commission-free trading has open the door for many novice traders. I consider myself a novice and invest an amount that will not hurt too much if my portfolio has great losses.
Wrapping it up
Kaizen tools are effective in managing your personal finances and creating wealth. The tools discussed include automation and force multiplier and are but a couple of tools that Kaizen offers.
However, regardless of the tools used they will require you your buy-in. You must dedicate time to achieve your desired results.
Don’t leave before downloading the FREE Kaizen ebook