14 Aug 2022

Making Cents: Have you heard of the Twelve Pillars?

Making Cents: Have you heard of the  Twelve Pillars?

As Roy Keane would say ‘fail to prepare, prepare to fail’ Picture: Pexels

I LISTENED to an audiobook recently, called the Twelve Pillars. It’s one of those self-help books that aims to inspire the reader to be the best they can, and to take control of their life, if, they follow the teachings and principles imparted by the authors.
Do what they say, and you could unlock the secrets to success in life.
Honestly, it was only an okay listen, and I probably wouldn’t have bought it, only for Jim Rohn was one of the authors.
Anyway, long story short, what I did get from it was an idea behind the title of the book, and I began to think, that if I was to write an article that un-locked the secrets to a successful financial life, what would those secrets or pillars be.
And if I could only limit myself to twelve principles, what would they look like?
So, I started writing down some thoughts, headlines really, of what might make the list. And I ended up with thirty-three which was obviously too much. I had to condense the list down to twelve which was difficult for me, because there were some great principles that I had to reluctantly leave out, but perhaps I’ll run a B-Team twelve principles article at a later date.
Anyway, here’s what made the A-Team, and I hope you like them and I can’t make a claim that they’ll transform your financial life, but I think if followed they might help.
And because there’s quite a lot to take in, I’ve decided spilt them into two articles, with six pillars this week and I’ll post the remaining six in a follow up article next week.

1. Don’t spend more than you make
If there’s one single fundamental law of personal finance, it’s this.
And unless you create a monthly surplus and your income exceeds your outgoings, financially you’re going nowhere.
The only way to make progress with your finances where you build stability and wealth and begin to achieve whatever financial goals you set yourself, you must live below your means, if that’s possible, and set aside the unspent income for your future, which in times like this is difficult I know.
Every month, you'll have a certain level of essential expenses that have to be deducted from your income i.e. food, utilities, mortgage, rent, transport etc. that have to be paid for. After you take care of these essentials, hopefully you'll still have some money left over from your monthly income, and it’s that surplus money that is the vital capital for your present and future self that needs to go into a savings account.

2. Follow the money
If I was only allowed to give you one piece of advice, following the money on a monthly basis would be at, or very near the top. And that’s because it has an impact on every aspect of your financial life.
You need to set up a budget whether you make thousands or hundreds of thousands of Euro’s every year.
And making a budget is the single most important thing you can do with your finances if you want to control your spending and increase your savings.
You have to understand your spending habits if you ever wish to gain control of your finances. The goal is to spend money on things that are important to you but cut back everywhere else.

3. Know your financial situation (and how it might change)
One of the biggest problems I encounter with people is them not knowing what their current financial situation is.
Debt and pension planning are areas they are particularly unsure about. And perhaps they are deliberately avoiding them because they know the numbers mightn’t look particularly good. But you must always know where you stand in each area of your finances, whether that is debt, savings, retirement, protection levels etc.

4. Be very clear about what you like to achieve
Most people aren’t clear enough about what they’d like to achieve. And when this happens, it's difficult to know what financial success looks like for them.
And that’s okay for a while but at some stage you must figure out what you’d like to achieve and once you know, you can then become focused about turning them into reality.
So, how do you start creating financial goals for yourself?
It starts off with a wish list.
And I think starting big is the only way. I’d suggest you get out a piece of paper or open a word document and just start thinking and dreaming and get down on paper what’s coming into your head, and some of those things might be:
n I want to buy a house by the time I’m 30
n I want to get out of credit card debt in 2 years
n I want to buy my next car for cash
n I want to retire full stop at 50
n I want to have €1,000,000 in my account on the 12th of June 2035
And you’ll know when you’ve written down the right ones, because they’ll jump off the page at you.

5. Have a plan
Once you’ve carried out that baseline assessment of your financial position and you’ve figured out what you’d like to achieve, next comes the strategy required for achieving those goals in the timeframes you set yourself.
There’s no point in having big goals, if you don’t have a plan that sets out very clearly what steps are required in order to achieve them.
So, if for example, you want to retire at 55, figure out what needs to be done to make that happen.
Know how much you’ll need, know how much you need to save each month, know what fund you should be investing into, and once you do, and you follow and stick to the plan, then you can retire at 55, if, you want to.
And the same principles apply to all aspects of your financial life. Know what you want first, put a cost on it, activate the plan which could be as simple as just lodging a specific amount of your salary into a dedicated account, then go back to work and get on with your life, safe in the knowledge that the plan you have in place is going to guarantee you success.

6. Take Action
All the optimism and goal setting and plans in the world does you no good without, action.
Action is where the rubber meets the road. It's one thing knowing what to do, and it's something else entirely to get it done.
Too many people wait until the time is right.
I’ll wait until next month, or until I get a higher paying job, or I’ll wait until the kids are older, and then I’ll activate the plan.
If you wait, all that happens is that you get older, and we know time is a key part achieving financial success. So, the time to apply what you want to happen, to that surplus income you create etc. is now.
If you don’t, you’ll fall into what’s known as the Law of Diminishing Intent, which states:
The longer you wait to do something you know you should do now, the greater the chances are you’ll never actually do it.
Next week, I’ll follow up with my remaining six pillars.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at or

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