Finances are all around us, so knowing the basic rules for using them wisely is vital. Let’s look at a set of simple financial rules that will help you to save money.
Pay yourself first
It is a habit developed and voiced by Robert Kiyosaki and observed by the vast majority of millionaires around the world. Renowned financial writer Dave Ramsey notes:
“Setting aside just $100 a month, starting at 25 and ending at 65, at 12% interest is $1,176,000. Anyone can retire a millionaire!”
This is one of the hardest skills to learn because it leaves us feeling like we’re working for nothing to accumulate and can’t spend it. That’s why becoming a millionaire is so difficult. Not because it’s impossible, but because many people want instant gratification.
Some experts advise a “50-30-20” rule: Spend 50% of your income on necessities (food, rent, rent), 30% on whatever you want, and 20% on saving and investing. Use this rule for all your income. Better yet, save 50% if you can.
Have a financial goal
According to a study by Thomas Corley, 81% of millionaires have a clear financial plan and stick to it, while only 9% of middle-income people do the same.
Most successful people first set a simple goal of “making a million,” and once they did, they started setting more ambitious goals of investing and diversifying their income.
Find your goal and make a financial plan.
Be comfortable with uncertainty
This is another habit that financially illiterate people are least likely to stick to. Millionaires know how to take risks and feel confident in any scenario. Tony Robbins, the famous motivational speaker, said:
“All life is built on uncertainty. Quality of life is determined by the amount of uncertainty you can handle. Develop faith in yourself, gain experience, and be more flexible. You will never know what will happen.”
Psychologically, uncertainty can lead to fear, which in turn leads to acquired helplessness, a reluctance to take action even in favorable circumstances. This is why the ability to be calm and confident about a foggy future is so important in financial matters.
Talk to millionaires
This may seem like mocking advice, but if you think about it a bit, you’ll realize that there are professions that are conducive to this. For example, journalists or writers can interview rich people and even get to know them.
Tony Robbins makes a case for this by saying that people in the same profession attract each other. This is also the case with financially literate people. Now, this is called networking and there are enough books written on this topic for everyone to prove themselves in this type of activity.
Grant Cardon, the author of five books on financial independence, writes,
“People who don’t have their own money are incapable of teaching you how to make it. You have to know what millionaires do to build their wealth. What are their habits? What do they read? How do they invest? What drives them? How do they motivate themselves?”
Don’t waste time on the Internet and TV
According to the same study by Thomas Corley, 76% of poor people spend more than five hours a day in front of the television or use the Internet in a non-useful way, while 60% of millionaires spend less than an hour. Rich people are always busy doing useful things, while poor people are just always busy doing something. And that significant difference costs the latter millions of dollars.
You may argue whether this is a financial habit, but any successful person will tell you that time is money. Don’t waste it.
Create multiple sources of income for yourself
Rich people very rarely get their money from just one source. They save and invest, and then they go around in circles.
Rich people know firsthand the financial risks, so they insure themselves by creating multiple sources of income. This rule may have no place in a love relationship, but in a financial one, it is golden.
Rich people very rarely make rash purchases, because they know how business and advertising works. Of course, we are talking about those people who have made their fortune. They buy exactly as much as they need – for their own needs and their own business. These are the people who distinguish price from value. They can afford a lot of unnecessary purchases, but they know what it can lead to because they were poor and remember that habit that kept them in that state for a long time.
Emotional spending can keep you at the bottom of the financial pit for a long time until you understand what it means to buy wisely. Instant gratification is destructive to anyone in any area of life, but doubly so in finance.
Get rid of the mindset of a poor person
Once again we are touching on the psychological aspect of money matters. There is no shortage of money in the world, there is only a shortage of people who think about it properly. To become a millionaire from scratch, you must get rid of the poor man’s mindset.
Observe the people around you who are barely making ends meet and ponder what and how they think. Notice their attitudes toward money and try to understand their psychology. Then answer the question,
“What do I have in common with these people?”
And get rid of any habits that are peculiar to them. Such careful work on yourself will lead you to success.
Read as many books on finance as you can
Not all successful millionaires read a lot, it’s true. This type of millionaire relies more on intuition than knowledge, but even they socialize and listen to people who read a lot of books on finance.
If you can read seven books a month and take an idea from each one, imagine how many ideas you will have after a few years. The world is constantly changing and you need to feed yourself with important information every day. Read the books we recommend, then look for others. Just make it a rule to apply the tips and ideas from each book you read.
Once you’ve established these habits in yourself forever, you’ll have learned a second important lesson. It’s time to learn the third element, which teaches us how to get rid of fear.
Napoleon Hill, in his bestselling book Think and Get Rich, lists six signs of fear. Knowing these signs will not only help us gain financial independence but also in other aspects of our lives.
If you’re not sure about your knowledge in finance or just need additional information, you can ask for finance homework help.