Friends, have you ever wondered why some people are rich and others are not? How can you get to that situation? How can you change your life so that you can have all the things you’ve always wanted? Some very simple, yet proven strategies will get you on the path to financial freedom and true wealth. Read these 7 Rules of Wealth Creation.
1. Develop a “rich” mentality
Without a doubt, your way of thinking is the most important factor that will determine whether you will be rich or not. True wealth and abundance come from having a rich psychology. You have to remove any negative beliefs you have about yourself or money. Buy yourself a copy of Napoleon Hill’s “Think and Grow Rich” if you want to understand how your thinking will make you rich (or not!). Whatever you think, you cause it, that is, the Law of Attraction.
2. Spend less than you earn, invest the rest wisely.
The average person spends 105% of their income, that is, they are in debt. Debt is only good if it is to build assets. This is a good debt! You should have a spending plan for your life to ensure 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. Finally, when you invest, only follow the investment advice of someone who is as rich as you want 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 such as: Assets, Liabilities, Liquidity, Net Worth, Leverage, Leverage, etc. and you must know what they mean to become a good investor. The mechanics (tools, strategies, investment vehicles, etc.), must also be learned to put it into practice with knowledge.
4. Pay off your debts… fast!
You can literally get rich by getting out of debt! Start by paying off the loan with the highest interest rate first. It could very well be your credit card debt. Then start with the debt with the next highest interest rate. To do this, establish a payment schedule month by month until the debt disappears. If you think you don’t have enough left in your monthly payment package 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 they 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. By reducing your liabilities (debt) which we talked about in Rule 4. The second way is by increasing your equity (assets). There are essentially 3 types of assets: Paper assets (stocks, bonds, pensions, etc.); Real Estate (Residential, Commercial, Development) and Businesses (Start, Buy, Rent). You absolutely must acquire the knowledge on how to invest in these asset classes to build wealth. Work within your own limits. Only buy assets you can afford or learn to use other people’s money (see rule 7).
6. Know the power of compounding
Did you know that if you invest just $5,000 per year with an average return of 7% starting at age 25, you’d be a millionaire by the time you hit 65? Ok, many of you want to be millionaires at a younger age. but it illustrates the point. It is vital that you decide on an absolute dollar amount that you will invest every month no matter what and stick to it to see your wealth grow 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 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 leveraging other people’s time (OPT) and other people’s money (OPM). The ability to generate and use OPM and OPT is crucial to gaining the financial freedom you desire.