In this article I will explain to you the financial fundamental basics so you can budget your cash and produce more.
Key 1) Put Your Wealth at Work for You
First, one of the main philosophies that you should keep in mind is that rich people put their wealth at work for them and not the other way around. Just imagine your own money working for you 24/7 non stop! Wouldn't this be great?
In other words this is called Passive Income, it's the art of building businesses that will make your cash work for you. I'm not saying it doesn't take alot of work!
But it's about working hard today and automating your system in the future. This means while your sleeping, eating, taking bath or whatever you are doing your still doing money. It's not like your job, where you go 9-5 everyday and exchange your 8 hours of work for money and while your not there your not receiving.
Some Ideas of Passive Income Businesses?
- Being the owner of your own company. Where you only manage the money and financial part.
- Investing in the stock market or bank.
- Writting a book. Takes alot of work initially but once you find someone to publish it, you will be receiving cash independently in what your doing.
- Over the internet, a good example would be building a website and monetizing it with adsense or by selling products.
Key 2) Pay Yourself First
The first thing you do every month before you start spending your money is to pay yourself first. For this open a bank account just for savings and don't touch it no matter what. You should atleast try to keep 10% of your earnings. I know sometimes might seem impossible but it's a very small amount of cash and with some small changes you can easily do it.
It's crucial to have this in mind because if you decide to save your money in the end of the month you will be more tempted to waste it all and not having enough for yourself.
Why is this so important?
Without saving money how will you ever be able to put your wealth at work for you and generate more? The trick is to preserve that percentage, than to invest and reinvest over over again. Only invest in something that you have true knowledge never in anything that you don't know.
Key 3) The Biggest Distinction Between a Rich and a Poor Person
Do you know what is the biggest difference that makes one rich and another poor?
- Bankrupt is one who wastes more money than he earns
- Poor wastes the same amount of cash than he earns
- Middle class pays himself first %5 to 10% of his earnings
- High Class pays himself first, 10% to 20%
- Rich pays himself first atleast 20% or more of his earnings
This means that by saving 20% and putting that wealth at work for you, you have a great possibility in the future of becoming rich!
Key 4) Control Your Cashflow
This is about managing the entries and exits of your money. The main objective is for you to know where your money is going and coming from. This consist in a daily diary, or weekly of your expenses. You can easily find many free softwares online that will help you do this or if you want you can write it down on paper.
This will help you make savings. What I do is, I first pay myself like I already explained, than I set a monthly budget of how much I can waste. Many of your normal expenses you can't do much about, like paying your rent, electricity and so on. Although you can do little adjustments and learn how to cut down your home electricity usage, or instead of going out for a dinner you don't and you save that cash. This is very important so you can in the long run put your wealth at work for you.
Key 5) Control You Desires and Always Pay in Cash
This is one of the hardest parts. Learn how to handle your desires and not buy more than you can afford. Also avoid asking loans from the bank and being in debt with them.
It's also vital that everything that you purchase you always use cash instead of credit card. It's far more easy to control the cash going out of your purse than when you don't see it.
Thanks for reading. I hope the tips that I offer will help you put your wealth at work for you, turn your life more easy and ultimately guide you to financial freedom.
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