Getting rich is not about how much we earn per month. While saving is a significant step towards being wealthy, it is only a start. There are numerous ways we can boost our finances to grow wealthy. All we need is to change our perception of money, whether that be through secured loans research or simply shifting the paradigm on its head. Let us discuss fundamental money skills we never learned in school.
Many folks think they are broke because of spending too much. Cutting back on expenses cannot solve most of our financial problems. What we need is to find additional ways to make money. Nonetheless, it is imprudent to spend above our means. Let us focus on ways that can bring more cash and financial assets. A side-hustle or pay rise can work. In business, we can consider a productivity boost. When we conform to the abundance mindset, we tap into more opportunities and bring more income. Cash is king when looking to save costs. The moment we get that extra cash in our hands, we can seize viable opportunities like real estate property and negotiate better prices.
Unless we are saving millions every month, getting rich cannot happen from monthly savings. Instead, what we do with the saved cash is what could make us wealthy. Liquid cash is good for emergencies. It is like a safety net for when our regular income drops. At any given point, we ought to save about six months of living expenses. It should help to get through tough times before we start earning again.
The type of car we drive or clothing brand we wear is not a reflection of our wealth. Instead, we are as rich as the physical possessions or financial assets we can convert and use in transactions. We need to apply some practical financial skills to amass such valuables. Let us not confuse depreciating assets for valuables. The truth is that a Lamborghini in the garage is a liability- it demands fuel, money to stay in shape, and insurance. Not to mention, cars depreciate over time. However, an interest-bearing property or investment is a worthy asset for building wealth. Land, for instance, appreciates. We can cash out more money from the land sale than we initially invested.
Some people have lived in abject poverty because they fear taking loans. The middle class also makes the mistake of only using their own money for everything. While it is a bad idea to borrow money for consumables, accessing manageable loans can increase our earnings. When running a business that needs hi-tech or machinery, we can upgrade through a business or personal loan. After upgrading, we can charge more, double the clientele base, or provide faster services. But before getting into debt, it is crucial to understand how inflation is going. We also need to have a good debt repayment plan whether the prediction happens or not. If we make calculations to charge more or increase sales with quicker services, we can afford to pay the loan and sustain a business.
Passive income is money we make while asleep. To understand the concept, we have to think beyond active income or the number of hours we devote per day to earn. With the right money skills, we could double or triple our current earnings. As we think of the next money move, our finances should already be working for us. We could spare some funds to build an arbitrage business that requires a hands-off approach to run.
If we are saving, we need to identify ways the money can grow in value to make profits and overcome inflation. To calculate wealth, we have to take away liabilities from the assets and savings. The resulting figure is what we can live without an active form of income. The longer we can survive without income, the wealthier we are.