3 Things you ought to know about money if you want to be financially wealthy
You ought to know how to get the money. Once you get the money, you ought to know how keep the money. Once you keep the money, you ought to know how to multiply the money.
This is not legal advice, this is just my opinion, you should do your own research.
How to get the money
How do you get money?
The answer is you simply work.
Most people do not have any problem getting money. Getting enough money is another story but we’ll get into that later, for now here are four to five way you can get money.
You can be an employee, you can be self-employed, you can be a business owner, you can be an investor or you can be a mixed of them.
Employee
Most people start being an employee. Working for somebody else is a way to make money. The 9 to 5 job that many people dislike help pay bills and bring food to the table.
There is nothing wrong being an employee, what’s wrong is staying on something you dislike and not doing something to improve your financial situation.
From a tax point of view, being an employee is the worse way to make money. However, this is the simplest way to get money since there are many job that do not require any skills.
You just show up and do what you are told to do.
Self employed
Self employee is the second worse way to earn money. You work for yourself. From a tax point of view, self employee pay less taxes than an employee since you get to deduct certain expenses from whatever work you have or do.
Self employee tend to make more money than employee since you have more control over the money and over the time you work.
Business owner
Being a business owner is one of the best way to earn money. It is possible to pay 0 taxes as a business owner if you know how to work the system.
Investor
Being a investor is another of the best way to earn money. It’s possible to pay 0 taxes as an investor if you know how to work the system. Specially when you starting out.
Tips:
As time passes you ought to always be looking to increase your income. Whether is through better jobs, better businesses or better investments.
How do you keep the money
Keeping the money is where most people have problem. This should be simply yet money people have a lot problem because of this.
Whether is because of student loan, high credit card debt, bad debt, bad expending habit, inexperience.
For those of you that got sucked in into student loans when you were young and naïve around the age 17 or 18 and now have a humongous amount of student debt, I know your pain and I empathize with you.
The true is that nobody is coming to help you. The chance of someone coming and getting you out of that debt hole are slim to none.
Hence, you should help yourself.
If you are in debt, you screw up. Blaming your parent, the system, yourself or somebody else is not going to solve the problem.
Acknowledge the problem and move on.
Keeping the money
Keeping the money is simple, you simply expend less than you earn. If you earn a dollar , you spend less than a dollar. Put the rest aside to invest into investments or into businesses.
Notice , I did say is simple but this could be extremely hard. Some people have not develop a beneficial habit like expending less than you earn and putting the rest aside.
Multiply the money
Multiplying your money is another part that many people have problem.
This part you simply take the money that you had set aside and invest it into investment like stocks, real estates, into businesses and so on.
Before we go any further, There is a golden rule that you ought to never be broken.
The golden rule is you ought to never spend your capital. You ought to never spend your principal. You ought to protect the money that your earned.
Example of what not to do
Imagine you spend less than you earn and you set aside $1,000 to invest.
If you take that $1,000 and put it into the stock market in hope of making a profit. Even though is a great thing that you are taking your time to invest, by doing this you are already might be breaking the golden rule.
You are gambling with your capital. You are suppose to protect your capital and you ought to never spend your capital.
Example of what do to
Imagine you spend less than you earn and you set aside $1,000 to invest.
You take that $1000 and put it into a platform where your money is protected where you cannot lose your capital. If you can get a small rate of return on it is great specially if the rate of return is equal or above the inflation rate but the main point is that you ought to never spend your principal.
Now that you money is save, you can take a loan against your $1000. The institution that have your money will grandly lend you money because if something were to go wrong they have your capital as collateral.
Now you take that loan money and invest it into the stock market.
- If you earn a rate of return of 5% and the loan is 3% then you profited 2%.
- If you earn a rate of return of 10% and the loan is 3% then you profited 7%.
- If you earn a rate of return of 20% and the loan is 3% then you profited 17%.
If you are investing for the long run, meaning buy low and hold forever or until you make a profit. Some years are going to be bad years, but since you are only paying the interest of the loan, you should be ok.
Why because 3% of $1000 is only $30, even when you have a bad year on the stock market, you should be able to pay the interest on the loan.
Some year are going to be really good years and you are going to be really glad that you started investing.
This could be any amount, I used $1000 so you can have an idea. And I used 3% loan so you can have an idea.
I just gave your the path to riches.
Final thoughts
You ought to know how to get the money. Once you get the money then you learn to keep the money. Once you keep the money then you learn to multiply the money.
That’s it.
Take a calculated risk.
Now, start and adjust as you go.
