Personal Finance Tips

The Formula for Becoming Rich

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The formula for becoming rich is actually quite simple. According the many of the self made billionaires in the world these are the steps to becoming wealthy for common folks (like you and me).

Step 1: Save like a maniac. The self made rich had to start somewhere. They are usually frugal early in there lives and take jobs or start small businesses at young ages. When they start getting a little money they save it and reinvest in their small business. If there is nothing to reinvest in they save. Most folks like to live at the level where they spend $1 of every $.80 they make, no matter how much they make. The self made rich spend about $.20 for every dollar they make and save the rest. These savings are their ticket to freedom but most of them don’t think of it that way. They save out of instinct and really enjoy it.

Step 2: Become an expert (or micro-expert) in a subject you’d like to make money in
Become passionate about an area of learning and master it. Listen to every single podcast you can find, read periodicals, magazines, newspapers, blogs, and anything you can about the subject you’re interested in. Become extremely knowledgeable about the inner workings of the investment vehicle you are going to ride out of poverty in. Don’t waste a minute watching TV, arguing with people online, or reading trivial facebook updates. Instead, read all the books you can find on your subject of choice, meet up with people in that area, attend lectures, go to tradeshows. Do everything you can to master your topic. Notice that there isn’t a set path of what you should be following. Obviously you don’t want to become a powerless academic that only knows the theory of how things work, you’re eduction will be much deeper than this.

Step 3: Go “all in” when the opportunity arises – When opportunity arises, usually through a change in the market, you will be ready to put all your chips in and be much better positioned than anyone else. In fact, because you know so much about the field you’re investing in you were actually anticipating the change everyone else was blind sided by. Going “all in” means you give this opportunity all of the savings you have saved up and give it 100% of your energy and time. Like a pitbull you don’t let go until you ride this ride for the full time. People that don’t understand what you understand will be alarmed or completely baffled about what you’re doing but don’t let that distract you. You know exactly what you’re doing. The first time you do this it may mean the difference between freedom and running in the rat race until you retire. With the new found freedom your confidence, resources, and deals will get bigger. The vivacious saving, learning, and deal finding only gets bigger with time and the formula is repeated.

Always Be Taking Action Those that bootstrap their ways to riches do so by always taking action, always progressing, and always finding ways to make things work. As long as you find ways to take action, instead of making excuses, you’re well on your way.

 

How not to spend money. Spending Less Money the Easy Way

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You will be able to make progress financially by either saving money or making more money. However, by saving money due to less spending you are also able to save paying taxes on those purchases. When you do need to spend money consider using the following tips:

By using cash instead of credit or debit cards you will spend less money. It is estimated that people will spend approximately 28 percent less when they use cash instead of a credit or debit card. You will tend to notice cash more when you spend it than when you use a credit card. There is an emotional connection between you and the cash. When you use cash only, you simply cannot spend anymore when you run out of it.

Keep track of your spending and you will be more aware of the pattern of your spending. You will notice more ways to save money, the areas where you waste money and the things that add up to costing you more than what you thought they would.

Make sure that you create a budget for your spending. You will be less likely to stray from your budget when you know how much you originally planned to spend. You will now be able to gradually reduce the amount that you spend over time as you stick to the budget.

Look for monthly expenses to eliminate from your budget. Some things are necessary to have in your budget but ask yourself if there are certain things that you could live without. Over time these unnecessary expenditures can add up significantly over time.

Try to walk or use a bike more often. You will save money on gas, oil changes, wear and tear on your vehicle and be able to do something positive for the environment and your health as well.

Do things yourself instead of paying others to do them for you. You may be able to change your own oil, mow your lawn or clean your house by yourself.

Pay off your high interest debts first before you pay for other things. Paying money on high interest debts is simply a waste of hard earned money.

Borrow things before you go out and buy them. For example, if you need to do repairs in your home and need certain tools to do it, why not try to borrow them from your neighbor. You may be able to return the favor at some point in the future. It is not wise to pay for something that you may never use or hardly ever need to use.

Watch out for sales and collect coupons to use at stores. By consciously choosing to be a home economist you will be able to save money in many areas of your life.

Try to eat out less. Eating out can add up very quickly. Eating food in a restaurant costs more money than if you were to prepare it at home. You have to pay for the transportation to get there, pay extra for the food, and pay for a tip on top of it all.

 
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