8 Tips all people follow to build wealth
Disclaimer: I am not here to give you financial advice, my only goal here is to motivate you to learn about this topic and do your research as you will see in the next items this is also one of the "rules" to be wealthy.
Learn how to check the facts.
With this idea in mind and disclaim above, let's go.
A lot of people think money can bring them happiness or fulfillment which is not true. Yes, being starving or needing basic things like clothes, healthcare, education is not good but a lot of people that reach these items in abundance more than often felt unhappy and empty. The reason why this is happening over and over again is that a lot of people see money as the end rather than the means, which is a really big problem.
So imagine this situation, I'm trying to lose weight and my goal is to lose 10 pounds, to achieve that I'll start doing a diet probably you think this is okay and a common goal, but what I learned on Atomic Habits by James Clear is:
You don't need to lose weight, you need to build more healthy habits, and then losing weight will be a consequence of it.
Doing a parallel to our subject here, you don't need to aim to make money per se because money is just a vector that transmits value between two ends, actually what you need is aim on the things that make you happy and use the money as an instrument to achieve it.
So before starting talking about how to invest in NFTs or cryptocurrencies which are risky because the returns of the investments are high (can be at least, keep looking the future posts) I want to give you 8 tips I collected from other posts and books and share them with you, these tips or suggestions will help you to build a solid foundation then you will be able to risk a little bit on these type of investments. So let's go 🚀.
1 — Separation of fixed costs variables
Fixed expenses are all reimbursed each month, such as water, electricity, telephone, food, housing, and the internet.
Variables are all costs that do not have a specific or predictable amount. They often deal with entertainment, such as clothing, travel, traveling, cinema, etc. It can also take the form of unexpected expenses, such as repairing a car or replacing an already defective electronic device.
A good deal is to spend up to 35% of revenue on this type of expenditure, with 15% on investment and 50% on important accounts (fixed expenses) should be set aside. Of course, because your basic income is higher than your expenses, you need to invest more to build your wealth faster.
2 — Organize what your sources of income are
It is very important to know where your money is coming from. Especially nowadays, when people gather in their spare time for professional activities.
This way you can understand where you are going and when some revenue needs to be replaced. Maintaining a good inflow is important for the financial health of your family.
3 — Map your family and individual goals
They should be divided into short-term, medium-term, and long-term. Goals that are considered short-term are goals with less than 6 months, such as debt repayment.
Medium and long-term goals are all goals that are older than 12 months. For example, planning a vacation, saving for college for your children, or paying for homework.
The reason why this is so important is that if you don't know where are you going, you will never reach there.
4 — Choose the right investment for your goals
If you want to save money, forget about current and savings accounts. Opt for more profitable assets and be as safe as possible, rethink your money regularly according to your financial goals.
Whether short-term or medium-term, you can take advantage of more liquid mutual funds, which offer 1 to 30 days for settlement (payout), than fixed income products.
This is so much important in this section, you need to use your GOALS to guide your INVESTMENTS not the opposite. Keep this in your mind.
5 — Respect your standard of living
People get used to it easily. If the family’s financial machine is well set up, there is always a desire to spend more than necessary.
This is the time to gain momentum and maintain your lifestyle. Remember: the rich have money, not those with luxuries!
Imagine a family that earns $ 10,000 a month but spends $ 12,000, and another who earns $ 6,000 but spends $ 3,000 invests $ 3,000 a month. Which do you think is rich?
6 — Avoid the most common mistakes
Avoid common mistakes. Especially what you consider innocent, such as small daily expenses. You have to be able to control them and, of course, count them, because there may be a difference in the monthly amount.
Another big scam is the buying impulse. If you have a problem, avoid bargains and offers.
7 — Financial education practice
It’s no use forbidding every family to spend money radically without showing the reason why this is done. Nor setting goals that are unrealistic or have serious impacts on the family’s standard of living.
So start teaching your family/yourself financial education slowly and show how the current economy can produce great results over time.
As we saw before, a good saving of $ 1,000 could now be the value of a new car in some years.
It is often very difficult for people to make long-term plans and they prefer immediate rewards. And that’s completely natural. But the first step in preventing this behavior is to admit a mistake.
8 — Check the plan
However perfect the family’s financial plan may be, it must be maintained.
Goals, revenue, and things change because you are a human being which means you're constantly changing so revisiting these bullet points will help you to keep things on track.
So, analyze how your finances are every month, and if there are any signs of a problem, don’t hesitate to stop and reorganize everything. It will work, and all your efforts will pay off!
I hope you enjoyed this post, leave a comment below it will be nice to interact with you, have a nice day.