For the past couple days I've been reading "The Millionaire Mind" by Thomas J Stanley. I want to bring up the part that discusses the difference between people who are income statement affluent and people who are balance sheet affluent. Income statement affluent people are the ones who have high paying jobs and lots of nice things. (Expensive home, fancy car, and expensive electronics) In reality, these people do not own these things; they have huge amounts of debt and pay thousands of dollars in interest payments every year. Balance sheet affluent people are the ones who have a high net-worth. They own their homes, own their cars, are in little to no debt, and ultimately will retire happily one day. How can you become balance sheet affluent instead of income statement affluent? Here's how:
1. Budget and Save
The biggest reason why many people have a low net-worth is because they let their emotions dictate their spending habits. Figure out exactly where your money is going and eliminate expenditures on unnecessary things. Make a commitment to save a certain percentage of your paycheck. 10% is a good start, 50% is beyond spectacular.
2. Buy High-Quality Items That Will Save You Money
Instead of purchasing large amounts of low quality items that will break and need to be replaced before too long, buy high quality items that will last a lifetime. At first thought this might be a bit counter-intuitive because you are spending more but if you look ahead to the future you will actually be saving a lot of money. You can never go wrong with products with a lifetime warranty.
3. Live Below Your Means
When most people come onto a raise or a large amount of inherited money they instantly raise their living expenses. They need to have the biggest house they can afford, all the newest gadgets because they have the excess money now. Resist those urges. Imagine how much earlier you could retire or truly move onto your dream, if you save that money now.
4. Have an Emergency Fund
Without enough liquid funds when unexpected financial costs comes about, they can cost you even more money than it would have originally due to interest on borrowed money and other related fees. Put at the very least 4 months of living expenses in a savings account where money can be withdrawn without any issues.
5. Invest Smart
Individual stocks are risky and stressful. Save the stress for the manager of a mutual fund. Mutual funds combine many different stocks so your risk is spread out vastly. We're trying to build money instead of losing it all right? The smartest place to invest money is in you. Whether it's getting a better education or using that money to start a business, investments on making more income are always going to have the highest return.
6. Take Advantage of a 401k Plan
Many employers offer a 401k plan, the typical employer matches every dollar you invest with $.50. That's a 50% return on your money right off the bat! It is practically free money so why would you ever turn that down?
7. Re-Invest, Re-Invest, Re-Invest
When that stock pick really works out and you decide to cash out and count the profit, avoid spending those profits. If you continually keep reinvesting your money it can grow to wild proportions. If you were to invest $1000 and were able to achieve 10% interest every year, after 40 years it would have grown to almost $54,000... Wow, I think you can see the power of reinvesting your money.
If you enjoyed this article come check out my website http://www.InspiredConsciousLiving.com for more great advice and information!
Article Source: http://EzineArticles.com/?expert=Brad_Schumann
Article Source: http://EzineArticles.com/7145294
1. Budget and Save
The biggest reason why many people have a low net-worth is because they let their emotions dictate their spending habits. Figure out exactly where your money is going and eliminate expenditures on unnecessary things. Make a commitment to save a certain percentage of your paycheck. 10% is a good start, 50% is beyond spectacular.
2. Buy High-Quality Items That Will Save You Money
Instead of purchasing large amounts of low quality items that will break and need to be replaced before too long, buy high quality items that will last a lifetime. At first thought this might be a bit counter-intuitive because you are spending more but if you look ahead to the future you will actually be saving a lot of money. You can never go wrong with products with a lifetime warranty.
3. Live Below Your Means
When most people come onto a raise or a large amount of inherited money they instantly raise their living expenses. They need to have the biggest house they can afford, all the newest gadgets because they have the excess money now. Resist those urges. Imagine how much earlier you could retire or truly move onto your dream, if you save that money now.
4. Have an Emergency Fund
Without enough liquid funds when unexpected financial costs comes about, they can cost you even more money than it would have originally due to interest on borrowed money and other related fees. Put at the very least 4 months of living expenses in a savings account where money can be withdrawn without any issues.
5. Invest Smart
Individual stocks are risky and stressful. Save the stress for the manager of a mutual fund. Mutual funds combine many different stocks so your risk is spread out vastly. We're trying to build money instead of losing it all right? The smartest place to invest money is in you. Whether it's getting a better education or using that money to start a business, investments on making more income are always going to have the highest return.
6. Take Advantage of a 401k Plan
Many employers offer a 401k plan, the typical employer matches every dollar you invest with $.50. That's a 50% return on your money right off the bat! It is practically free money so why would you ever turn that down?
7. Re-Invest, Re-Invest, Re-Invest
When that stock pick really works out and you decide to cash out and count the profit, avoid spending those profits. If you continually keep reinvesting your money it can grow to wild proportions. If you were to invest $1000 and were able to achieve 10% interest every year, after 40 years it would have grown to almost $54,000... Wow, I think you can see the power of reinvesting your money.
If you enjoyed this article come check out my website http://www.InspiredConsciousLiving.com for more great advice and information!
Article Source: http://EzineArticles.com/?expert=Brad_Schumann
Article Source: http://EzineArticles.com/7145294
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