I learned everything I know about money from my parents, books, and life experiences. They taught me that I either had to take control of my finances and become financially free or let the banks control my money and I lose. My parents pushed me to begin working the day I began middle school.They didn’t push me to work because I needed to pay rent. Rather, they pushed me to work so that I could begin to understand the power of money and the importance of utilizing money to its greatest capacity. Throughout the years with various jobs and side businesses, I have also learned a thing or two about how to maximize the money you have and how to make it work for you.
Below are five tips that will enable you to become a wealthy person through dedication and focus.
- Determine How Much Money Will Satisfy You
Before you completely organize your life and become a wealthy adult, you have to determine what yearly income will satisfy all of your reasonable needs. Granted, every year that you are alive, your interests and desires will change. Regardless of that, giving yourself a tangible number will allow you to track your progress in reaching that desired number; be it through your sales, service, salary, and/or investments.
Personally, there is a number that I know I can live comfortably with. On the other hand, I don’t want to live comfortably, I plan on LIVING. What I mean by that is that I am working hard now so that I will have enough residual income (available money after all debts and bills have been paid) coming in every month from various avenues in order for me to be able to travel throughout the year and enjoy the luxuries of life. If this lifestyle is more so in your lane, you have got a lot more work to do than someone who doesn’t require much money to live comfortably. Although it will be harder to attain, it is not impossible to achieve!
- Pay Off Credit Cards
As a young 20 something, buying things you currently cannot afford means that you have to work harder to make enough money to buy it. As we get older, banks understand the mind of young adults when it comes to spending and they feed into it by throwing various credit cards at us. The credit limits for some banks can be ridiculously high, but the banks don’t mind. Reason being, when you don’t pay off what in essence is “borrowed” money from the bank, you have to pay interest. This can change a person owing a thousand dollars to owing five thousand dollars quite rapidly when managed poorly.
Unfortunately, we can’t really run away from credit cards, since a high credit score through card usage and payments will allow you to get mortgages, cars, etc. what is most important is that you get in the habit of paying off your credit cards quickly. The last thing you want is to go to a car dealership to finance a car that you’ve wanted for so long just to be turned down because you either have a low credit score or you have no credit history. I urge you to properly manage your credit card usage but also get updates on your credit score yearly.
- Think Long-Term
In my eBook, this tip is of high importance. In our day and age, almost everyone is either living day-to-day or for the weekend. These are the people who party every night then complain about how broke they are. In order not to be in this group, you have got to make the decision to think further than the next two days. What I mean is that you have to make a list of what you expect your life to be like in the next ten to twenty years. If you’re bold, you could even plan for further. Yes, it won’t be easy to get in that mindset but once you start to visually see what you desire in the future – be it a specific amount of money, a home, or car – you will be more meticulous in how you spend the money that you have right now.
Not all millionaires and multi-millionaires came into wealth by owning businesses. Many of them know how to manage their money and think twice before they splurge on things they don’t need. Instead of spending three hundred on drinks at a bar, if you had decided that you wanted a net worth of one million by forty, you could have invested that same amount of money into a mutual fund and gradually build on it until you reach that million dollar mark. You have to organize your life before you blow your chances of achieving your long-term goals.
- Let Your Money Work Hard For You
Most of us have been taught by our parents that you must get a good education, get a good job, work until retirement and live on your pension. Well, I’m sorry to say that this equation is no longer viable in our generation. In the past, food cost less, gas cost less, and the quality of life that you would have desired was easy to attain. Presently, with a degree, you will get a job, but you won’t be successful and wealthy. The reason being is that YOU are working hard for your money, instead of letting your money work hard for you. If you want to be wealthy this needs to change. You have to create multiple streams of income, aside from your day job.
What will you do if you get sick, can’t go into work and have no money coming in? if you have side incomes such as real estate property, stocks that carry dividends, an online blog that carries advertisements, etc. it will be fulfilling to know that you can stay home and have money guaranteed to come in daily, weekly, or monthly. Letting your money work for you simply means that you have saved and invested in things that don’t require you to manage it daily.
- Spend Less Than You Earn
Because of credit cards and the constant advertising that is thrown in our faces daily, we have succumbed to the curse of spending what we don’t have. Most of us work part-time or entry-level jobs that perhaps doesn’t bring in the amount of money we would like. Yet, we spend as if we are making fifty thousand dollars a month! To be wealthy, you have to understand that the men and women who are already wealthy do not throw their money into everything. Even the boxer Floyd Mayweather (who has a net worth of $650 million) has been seen picking up a dollar that he dropped inside a Versace store. Why is this? This is because the wealthy respect every dollar. They understand how hard they have worked for their money and they aren’t willing to blow it on things that will surpass what they actually can handle.
It is important to track how much money you are actually spending, compared to how much you are making. I would recommend to carry cash and withhold the urge to grab your credit card for every purchase. Over time, you will be accustomed to spending cash instead of your credit card and this allows you to be aware of your spending.
These five rules will help you get on track to financial competency and wealth, but the list doesn’t end here. There are hundreds of tips that can benefit you in becoming financial equipped to live freely and happily (which you may see in a later blog post). The main thing that you need to determine is whether or not you are willing to change your current habits with money. The process won’t be easy, but once you get a hold of your finances and your current money beliefs, the possibilities of wealth are endless. If you are interested in learning a multitude of tips that will guide you into financial freedom as it has done me, check out my eBook that is on sale now Amazon, 50 Rules for 50 Fools: Financial Tips for Young Adults.