7 rules for wealth creation
Friends, have you ever wondered why some people are rich and others are not? How can you get into that situation? How can you change your life so that you can have all the things you always wanted? Some very simple, but time-tested strategies will get you on the path to financial freedom and true wealth. Read these 7 rules for building wealth.
1. Develop a “rich” mindset
Without a doubt, your way of thinking is the most important factor that will determine whether or not you will be rich. True wealth and abundance come from having a well-off psychology. You have to eliminate any discouraging beliefs you have about yourself or money. Buy yourself a copy of “Think and Grow Rich” by Napolean Hill if you want to understand how your thinking will make you rich (or not!). Whatever you think about, it produces it, that is, the Law of Attraction.
2. Spend less than you earn, invest the rest wisely.
The average person spends 105% of their earnings, that is, they are in debt. Debt is only good if it is for building assets. This is good debt! You should have a spending plan for your life to ensure that you only spend what you have and then save and / or invest what is left. It is recommended that you save at least 10% of your earnings. Lastly, when investing, only follow the investment advice of someone who is as wealthy as you want them to be.
3. Learn the language and mechanics of money
Earning money and getting rich can be a bit like learning a foreign language. There are many terms like: assets, liabilities, liquidity, net worth, gears, leverage, etc. and you must know what they mean to become a good investor. Mechanics (tools, strategies, investment vehicles, etc.), must also be learned so that you can put it into practice with knowledge.
4. Pay off your debts … Fast!
You can literally get rich out of debt! Start by paying off the loan with the highest interest rate first. It could well be your credit card debt. Then start with the debt with the next highest interest rate. To do this, establish a monthly payment schedule until the debt disappears. If you think you don’t have enough of your monthly payment package left to start paying off those debts … think again. Everyone can buy one less cappuccino a day, make a sandwich for lunch, walk instead of taking a taxi, etc. Simple things but that make a difference in your net position at the end of each month.
5. Acquire assets
There are two ways to increase your net worth … 1. Reduce your liabilities (debts) that we talked about in Rule 4. The second way is to increase your wealth (assets). Basically, there are 3 types of assets: Paper assets (stocks, bonds, pensions, etc.); Real Estate (Residential, Commercial, Development) and Business (Home, Purchase, Rent). It is absolutely necessary to acquire the knowledge on how to invest in these asset classes to build wealth. Work within your own limits. Only buy assets that you can afford or learn how to use other people’s money (see rule 7).
6. Know the power of composition
Did you know that if you invested just $ 5,000 per year with an average return of 7% starting at age 25, you would be a millionaire when you turned 65? Ok, many of you want to be millionaires at a younger age, but it illustrates the point. It is vital that you decide the absolute dollar amount you will invest each and every month, no matter what, and that you stick to this so that your wealth grows through compounding.
7. Use other people’s money, other people’s time
I don’t know how many times I’ve heard people say “I don’t have the money to do that.” Listen, nobody does. But saying this is a good excuse that allows you to stay within your comfort zone. The answer to any problem is always outside your comfort zone. One of the keys to getting out of the rat race and creating financial independence is knowing the secret of taking advantage of other people’s time (OPT) and other people’s money (OPM). The ability to generate and use OPM and OPT is crucial to obtaining the financial freedom you want.