4 steps to become financially wealthy.
Wealth is taboo for some middle class and poor people. I’ve heard many people say, I don’t want to be rich or a become a millionaire because those people are unhappy! While there are some unhappy wealthy people, there is also jubilant wealth people. Happiness at a state on mind and it can be achieved by anyone.
Changing Mindset
Financial literacy must be incorporated into learning and development of a child or teenager. If you give money in exchange for completed chores, you’re subconsciously teaching your children to become an employee; wages exchanged for time. An alternative will be, rewarding your children after reading educational books in exchange for money; they will develop their mind to earn money while learning.
Changing the mindset is the first step to gain wealth.
If you grew up with role models that have achieved financial freedom and wealth; it will be almost effortless for children to learn the skills and knowledge to achieve the same. On the other hand, if you grew up with parents that advise you to achieve a good education and work for a Fortune 500 company/earn a good job then you’ll need to learn how to shift your mindset from trading your time for money. Trading time from money is the most difficult path to achieve wealth or financial freedom because when you stop working, no income is generated. You want to definitely change this…it be awesome to sit at a lake, sleep in or do absolutely nothing between the hours of 9–5 on a weekday while generating income!
Types of Income
Robert Kiyosaki wrote in his book, Cashflow Quadrant, switch the way you earn money from employee and self -employee who trades time for money to Big Business and Investors who owns the system that generates money without trading time as well as using other people’s time and money.
There are a few ways to generate an income;
1) earned- trade time for money. Employee like me working 9–5 for a company.
2) passive income — your money generating income without trading time, example rental income, income from publishing books, YouTube and Online Course.
3) portfolio income; income generated from investment such as dividends, interest, capital gains and royalties.
Your main source of income should be generated from passive or portfolio, if you’re to gain financial freedom and wealth. In the categories Employee and Self-Employed income is not generated if you take six months of vacation because it’s earned income. This is the reason you want to switch to Big Business and Investors. People money and time will be working for you instead of you working for your money. I’ll definitely recommend reading Rich Dad, Poor Dad and Cashflow Quadrant by Robert Kiyosaki.
Investments vs Savings
Saving your money in a .01 interest account is a losing the war before entering the battle. Inflation rate is 2%-3% which means the same product or services in 2020 has increased between 2%-3% in 2021. Quit saving and start investing in a low expense and risk tolerant investment vehicle such index funds or ETFs. These accounts generate a higher Return on Investment. These are long-term investment. I personally invest with Vanguard. Before investing ensure that you have an emergency fund for a rainy day. Dave Ramsey spoke about starting with $1000 emergency fund. Your emergency fund should be easily accessible, Money Market Account or High Saving Yield Interest Account. There are banks such as T-Mobile Money, Ally or Citi-Bank, interest rate range from .05%-4%.
Tracking Expenses
This may sound trivial but it is worth your time to track expenses for at least six money! This is the only way you’ll know where your money goes by intentionally tracking every penny you spend. Google Sheets provides a spreadsheet for annual budgeting and tracking. By tracking your expenses, you can determine what you’re doing right and what needs to be eliminated from your spending. 202o personally taught me how to quit going to the spa for facials, threading and waxing. I saved at least $160 per month or ~ $1900 by eliminating spa services; I do it at home for a fraction of the cost. I also eliminated Disney plus subscription when not in use. The goal is to invest or save as much as your income as possible. Usually it’s 15% however, it depends on your income; I’ll increase the percentage of you earn more than the median salary.
Learn a new skill
If your income is lower due to a lack of skill sets, I’ll recommend learning a skill through a mentorship program or going back to school. There are options for self directed learning such as YouTube, Udemy or reading books by joining your local library then signing up for the certification. If you increase your knowledge and skill set your potential to generate a higher income will be in your favor. Skills and knowledge can make your money work for you instead of you working for your money. You can learn on the job as well but the time it will take to accomplish this may be longer therefore if you don’t have time, invest in your education. Do research on what services are most needed as well as high income potential then use that information to find a program to learn those skills.
As you journey to become financial wealthy or build wealth, I wish you all the best.
