As you know by now, Gleb has started guest blogging on this site and thankfully I have been asked to participate.
My name is Mark McManus, I own Build Your Life To Order – a personal development blog with a strong emphasis on health/fitness, wealth, happiness and spiritual matters. Gleb is also posting over at my site today, it’s an article called How To Achieve Your Maximum Productivity.
Okay, so how do we acquire the wealthy mindset. Firstly, understand that riches come to those with the right mindset, it’s not solely about finding the right strategies. For proof, just look at lottery winners who become wildly rich but still have a poverty consciousness. These people go broke in a few short years again. Below are 5 tips that I recommend you internalise and live if you seek financial independence.
Save On Autopilot!
Have money deducted from your wages automatically – An absolute must. You must not even see this money. If you are in a relationship, open a savings account in both your names and decide on an amount that you each will get deducted and transferred to the new account.
Some people recommend 5%-10% but I recommend more. Unless you are on a very low wage I’m sure you can manage more. Personally, myself and my partner Tracy, put away about 25% of our joint income into our savings account and we don’t even miss it. It’s very nice to go online every now and then and see it building up!
Invest These Savings!
Invest your savings! Don’t just look at the money you have saved, do something with it. Consider each pound/euro/dollar you have as an employee of yours, and send them out to work. Whether it’s real estate, stocks, foreign exchange, or something small and local you must have your money earning you more money. If this isn’t your cup of tea, at least put your money into an Individual Savings Account where you’ll get 5% or more interest rate. Note that if you aren’t getting at least 2%– 2.5%, inflation will ensure that your money is actually decreasing in value all the time.
Don’t pay interest on liabilities! A liability is something that you buy that costs you money. A prime example is a car. People take out loans on cars, which if you’re not rich, is not financially smart. Think about it, your paying interest i.e. you’re paying more than what the car is actually worth, for something that is continually decreasing in value! If you must buy liabilities, whether it be a car or a horse, pay for something you can afford outright or do without.
Do pay interest on assets! An asset is something that earns you money. I own a piece of real estate that is earning me anywhere between £5000 – £12,000 a month since I acquired it. Now, I pay the bank interest on the loan that I took out, but do you think I’m worried about that? Of course not. When your asset is giving you more back than the repayments you have to make, you’re in positive cashflow – a good place to be! This is what’s called ‘Good Debt’.
Be Smart With Uncle Sam!
Be Tax Savvy – Whether your chosen field is real estate, stocks or owning your own business, read up on the tax implications and how you can soften the blow. There are many very legal ways to avoid having to pay tax or greatly reduce it. All rich people become tax savvy, it’s another must. If you’re a beginner, search on Amazon for books, I was amazed at how many great, practical books there are on this matter. Money you acquired is better in your pocket than the government’s, right?