10 Financial Tips To Help You Grow Your Wealth
The basic ideas for making and keeping money.
Money is something we all want. If you have money, you can buy things and live the life of your dreams. A lot of people spend their time working for money. For most, the primary source of income is their job.
If you have a job, you can do three things with the money you have earned. You can either spend it, save it, or invest it. How you manage these three activities can determine your financial intelligence and how wealthy you will become in the future.
“Money without financial intelligence is money soon gone.”
— Robert Kiyosaki, Rich Dad Poor Dad.
Growing your wealth and becoming rich has nothing to do with your education or degree. It has a lot more to do with your financial intelligence. It is your behavior towards money that matters.
Wealth can have a different meaning for each of us.
What does becoming wealthy mean to you?
Is it having a lot of money in your bank account?
Is it the ability to afford expensive things?
Or is it having the freedom to do the things you like?
Whatever it is, we all want to become wealthy. So here are ten financial tips you can implement in life to grow your wealth.
#1. Understand that it is not how much money you make. Instead, it is how much money you keep.
Earning a lot of money is not enough to become wealthy. You have to learn how to keep and grow the money you have made.
Suppose you won $1 million in the lottery. You are thrilled. You decide to spend the money buying expensive stuff because you can afford it now. If you do this, you will be back to zero soon. Instead, if you invest some of the money in the stock market, start a business, and create a diversified portfolio, you could have a wealthier life in the next few years.
Earning money and keeping money require different skills.
For instance, earning money requires taking risks, hard work, and optimism. Keeping money requires you to mitigate risk, avoid greed, and live below your means.
#2. Save more
Save more money. It is the most common financial advice. But saving is one of the most effective financial decisions you can make.
Can saving money alone make you wealthy? No, it cannot. Saving money will, instead, decrease its purchasing power because of inflation. But here’s a simple truth: the more money you save, the more money you have. Saving gives you financial freedom and security and allows you to take calculated risks.
The general rule of thumb is to save 10% of your income. But the truth is that there is no rule. You can save 20%, 30%, or even 50%.
“Do not save what is left after spending; instead, spend what is left after saving.”
— Warren Buffett
Do not save to save. Save to invest. Learn how to make more money with the money you have. That is what the rich do.
#3. Change your psychology about money
Morgan Housel, the author of The Psychology of Money, says that making money is more about your behavior than your intellect. It is about how you behave according to the three main money habits — spending, saving, and investing.
So being wealthy and having a lot of money has nothing to do with your knowledge, IQ, or how good you are at math. Instead, your thoughts and emotions about money play a significant role. You can be wealthy regardless of your family background, past experiences, and academic degree.
You need to be optimistic about the future and start changing your attitude and actions towards money.
#4. Money buys freedom
In the big picture, becoming wealthy is not just about having a lot of money and being able to spend on things you want. It is about freedom.
You want the freedom to spend your time doing the things you love. So being wealthy means having the freedom to do what you want, where, when, and with whom you want.
Every time you buy something, understand that you give up some freedom and time. In other words, quit buying things you don’t need because you could be giving up your chance to have freedom.
#5. Invest early
Warren Buffet bought his first stock at the age of 11. It gave him the advantage of starting early and learning about investments. Today, he is the wealthiest investor in the world.
To understand the benefit of investing early, you will have to understand the magic of compounding. The more frequently your money earns interest, the faster and more prominent your money will grow. As interest is added to your account, you make interest on the original amount plus the past interests.
So invest early. It will give you a chance to learn more and become financially free. Furthermore, your future will be financially secure.
6. Live below your means
If you want to be wealthy, frugality should be your new best friend. In modern terminology, living below your means is also called minimalism.
The logic is simple; track your expenses and keep them low, save as much as possible, don’t spend on unnecessary things, and sell the things you don’t need.
Minimalism refers to living with only the things you really need — a simple, distraction-free life.
#7. Diversify your income
Never rely on a single source of income because you cannot become wealthy with that. Instead, develop multiple earning streams. Every wealthy person has more than one income source. Research says that, on average, a millionaire has at least seven income streams.
For most people, a 9–5 job is their only source of income. But unfortunately, that is never enough to become wealthy.
Diversify your income sources. How? Learn new skills that can help you earn more money. Keep your day job and start a side hustle. Study rich people. Look for more opportunities.
Examples of income sources are dividends from stocks, interest income, blogging, YouTube, affiliate marketing, online tutoring, freelancing, selling online, etc.
#8. Buy assets
Buying assets is one of the best ways to make money from money. Rich people buy assets that generate income. Then, they reinvest their profits.
Assets include stocks, bonds, real estate, notes, intellectual property, etc. In Rich Dad Poor Dad, Robert Kiyosaki uses cash flow diagrams (shown below) to explain the importance of buying assets.
According to Kiyosaki, the poor spend all their income on expenses. The middle class has liabilities that they cannot avoid and have further expenses. On the other hand, the rich have assets that generate income.
The larger your assets column, the richer you will become.
#9. Set financial goals
Financial goals help track your income, expenses, investments, and savings. Setting goals will give you a clear vision of where you want to be financially in life.
Write down your goals. Where do you see yourself financially in the next five or ten years? Develop a plan that will help you achieve your goals. Remember to keep a timeframe in mind when setting goals.
Make a plan for your earnings, savings, spending, and investments, and be strict with your money habits.
#10. Keep learning
Learning never ends. Each day is an opportunity to learn and grow. Be curious about money. There are different ways to make money. Explore them.
Learn new skills that will help you make money. Build multiple streams of income. Learn about money management and develop good money habits.
Study the rich people and learn from their lives. There are endless ways to learn. Remember, the more you learn, the more you can earn.
We all have different money goals. Some of us want to be rich and famous, while others want to have enough to sustain a life without financial problems.
Following the above tips will solve your money problems and help you live with financial freedom. Take action today to make your future secure. Your savings and investments will prepare you for the future.
Small steps lead to significant changes. Make small changes to your money habits. Stop spending on things you don’t need. Start saving. Invest. You do not need a lot of money to become wealthy. Invest small and do it consistently. Then, compound interest will take care of the rest.
Consistency leads to growth. Your money will surely grow if you are consistent with your investing habits. Lastly, be patient. Do not go after get-rich-quick methods. Instead, educate yourself about money and how it works.
Good luck with a wealthy life ahead.
Thanks for reading.
CONTRIBUTED BY Biliz Maharjan
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