1. BUYING ASSETS OVER LIABILITY
First of all, you should know the difference between an asset and a liability, you should have the ability to identify what is what clearly. People often confuse between the two but this is the only thing that you need to do in order to be financially free. If done properly then it can do wonders for you and even amass generational wealth.
People who are financially illiterate will tend to buy liabilities more often than assets.
In simple words, liabilities tend to take money out of your pocket but assets, in the long run, put money back into your pocket. Generally, companies make liabilities more attractive than assets because they don’t want you to make money out of their product and the millennials are the ones who buy into those ideas.
Don’t have a $100,000 bag to put $20 in it, rather have a $20 bag to keep $100,000 in it.
Know the difference between a need, want, and desire. Also, know how to spend your money on them. Financially illiterate people have the habit of spending money on things they don’t need, from the money they don’t have to impress people they don’t even like. The fashion of looking rich and successful is more trending nowadays than actually being rich and successful. Never underestimate anyone on their looks because someone who is fashionable may be $50,000 in debt and someone who is wearing a simple black shirt may be a millionaire.
NEVER JUDGE A BOOK BY ITS COVER, NEVER.
How to Turn Your Liability into an Asset?
1.Your primary house, where you live, is not an asset rather it’s a liability. Your 2nd house or 3rd property is an asset.
A way to make your primary house an asset is by listing any empty room on Airbnb or renting it permanently. This way you would be able to easily afford the mortgage on your property.
2.Again, your car is not an asset, rather it’s a huge liability as to the value of your car drops instantly by 30% as soon as you leave the parking lot of the showroom. Additionally, many additional funds are needed for maintenance.
A way to make it an asset is by listing it for rental uses.
2. KNOW MORE “HOW TO SPEND” THAN TO “EARN”
You should know how to manage your money more than how to earn it. Because sooner or later everybody starts earning money in their lives at some point but how to manage it, no one teaches us. You must have heard many actors and athletes go broke in 5 to 6 years after their retirement. Also, you must have heard that most lottery winners go broke in few years.
People generally do good in their lives but they don’t know how to manage their money so eventually, they end up just above broke before the end of the month.
Being broke is hard, being rich is hard, choose your hard.
If you don’t know how to manage your money then you will always be working for it instead of money working for you, a formula used by the rich for decades. We live in a world where one can make more money out of the available capital, financially illiterate people don’t think about these things rather they focus on saving money instead of investing it.
Money management is a game that needs to be understood in the way you play “Business”.
Don’t go broke looking rich, instead look broke while actually being rich.
Why does all Ultra-Wealthy invests?
If you consider all the top wealthy people you would come to a conclusion that at some point in their lives they have invested their money in the stock market.
Whatever you do in life if you don’t invest then you wouldn’t know where all your money went in the long run even if you have a high-paying job because an average person spends it on the weekends and doesn’t have enough when he actually needs it.
The percentage that you spend on your needs and wants should be reduced and shifted towards investing.
Investing early is the key to early financial freedom, it certainly increases your chances of enormous wealth.
3. MEASURE TWICE BEFORE CUTTING ONCE
If you can’t afford it twice then don’t buy it unless it’s a need. Wants and luxuries can be avoided in the beginning.
Always remember to buy luxuries at last.
Always ask yourself do I need it, even 1% of the answer is no then do not buy it because wants never ends and desires are never fulfilled. And don’t buy anything to impress people, that will be a fancy way to lose your money without your acknowledgment and it will always pop a question in your mind “where did all my money go?”, without you knowing the answer of it.
Most problems in life can be avoided by having multiple sources of income.
Why you should be having Multiple Sources of Income?
It’s good in life to have a lot of options especially in the field of money, if one option gets deleted or delayed then you are left with other options to support yourself. There will be some situations in life where life would lead to devastation and these options will be the only thing that will save you in those critical situations.
The average millionaire has at least seven sources of income because for making a fortune unless you do something very big, one source of income won’t cut it. Having multiple sources of income is a boon that very few people realize. It automatically makes your life easier by creating a lot of options for your future.
If you have only one source of income then in the long run it becomes a liability rather than an asset because of fear of losing everything along with that option.
4. MONEY BEGETS MONEY
It simply means money produces more money. We live in such an economy where someone having capital can earn more than someone who’s starting from scratch. We live in a capitalists society where the rich gets richer and the poor get poorer. This phenomenon was seen more in the pandemic period where the difference between the two widened and currently it is at an all-time high.
Money doesn’t change you, it actually reveals who you really are.
