I want you to engrave two words in your brain: Choice and Freedom. Does that sound like something you would like to have?
A simple shift in the way you look at money will turn you into a wealth magnet. But first you need to understand some basic principles…
Rich Man Vs. Wealthy Man
Building wealth is more than making money. There are a lot of rich guys who are still trapped in the rat race.
The problem with a rich man is that he needs to work to earn money. The minute he stops working the flow stops and he won’t be able to sustain his lifestyle for a long time.
A wealthy man, on the other hand, doesn’t work for money; he makes his money work for him. So, even if he never moves a finger for the rest of his existence his standard of living is safe.
So, the definition of wealth is…
The amount of capital you need to sustain your current standard of living without working. It can also be some kind of passive income vehicle that allows you to earn money while you sleep (a business that operates automatically, dividends, etc.).
Where should you start… ?
I will tell you the first place any man who aspires to build wealth should start: Getting your personal finances in balance.
I want to quote Elisabeth Warren: “When your money is in balance, you always have enough to pay your bills, have some fun, and save for your dreams”.
Here are some easy to follow principles I learned from Elisabeth’s Warren book “All Your Worth”. I have been witness of their effectiveness many times.
#1. – Limit your Must Haves to 50% of your income.
Your Must Haves are the things that you will need to pay month after month, no matter what.
There are many reasons, according to Elisabeth, for limiting them to half of your income. For example: in case you lose your job it will be easy for you to cover your needs with your unemployment check for several months. There are other reasons of course; I encourage you to read All Your Worth to find out more.
#2. – You should have some money to spend on yourself, and it should be around 30% of your income.
It’s impossible to be disciplined when we can’t spend some cash on ourselves. But when you are able to have some fun with your money wealth building becomes automatic and inevitable.
#3. – You must save 20% of your income.
At first you are going to use this money to pay debt. You can’t think about investing your money when you are paying the bank high interest rates. It would be very hard to find an investment that makes you 15% or more. So paying your debts is your first big investment decision.
When all your debt is paid you can start saving and thinking of future investment alternatives.
Try to get as close to this numbers as you can and you will be on the fast way to wealth creation.
Transform your wealth thinking and any actions towards financial independence will follow effortlessly, I encourage you to study The Money in Your Mind Course. I know it will be a great tool in your journey to financial independence.