"How can I be rich?", is a question we often hear. Strangely, it is not in the first place the amount you earn, but how you manage your income, that plays the most significant role in making you rich. Manage your money smartly by following the following nine guidelines to become rich:
Develop a life purpose. A life purpose steers the management of your personal finances from planning to implementation. It also helps you to lay down a strategy and to persevere with it.
Develop positive thoughts. To become rich is a long-term process during which you will encounter many obstacles that block your way. You could allow these obstacles to destroy you, or you could transform them into opportunities. There are numerous examples of successful people who transformed their greatest obstacles into their highest achievements. A positive mindset is a prerequisite if this is to happen. According to Robert G. Allan, The future you see, is the future you get.If your goal is to be rich, you need to a) dream and visualize how rich you want to become and b) plan for it to become reality.
Set clear objectives.Dreams are not enough to be rich. Decide exactly what your objectives are and put them down in writing. Objectives should be specific, achievable, measurable, simple and flexible. Important is to include the objectives in your budget.
Increase your knowledge and improve skills. You don't have to be a financial guru, but you should at least have a basic understanding of how inflation, interest and taxation influence your finances. You should also be aware of the basic principles of investment, as well the characteristics of fundamental asset classes, like cash, shares, property and bonds. Visit our Wealth Library to order all the important books on how to get rich or subscribeto My Wealth, our FREE newsletter on how to be rich.
Spend less than you earn. It is a much easier to spend money than to earn it. This applies also to business or personal finances, regardless of whether people have to manage small amounts of money or large ones. To create a surplus by spending less than you earn is one of the most important goals in creating personal wealth.
Invest - Let your money work for you. By investing regularly, you receive the benefit of compound interest and compound interest is the most powerful way of making your financial dreams come true. Here is a practical example: An 18 year-old who starts to invest R36.67 per month at an average return of 12% per year, will have accumulated R1-million when he turns 65.
Invest in property to create wealth. Everyone needs somewhere to live, but the way in which a property's finances are handled determines whether wealth is created or destroyed. People who borrow money from their mortgage to increase their standard of living destroy wealth, while the opposite is true of those who reduce their outstanding bonds.
Create a passive income. To attain financial freedom, it is necessary to earn a passive income that you don't have to work for. Ways of earning a passive income include: Bank interest, rental property, royalty income, subscription income, network marketing, internet sales, affiliate marketing and dividends paid out by shares.
Protect yourself against risks. Short term and life insurance is one of the cornerstones of sound financial planning. Learn how much insurance you need. For people that want to get rich, too much life insurance is as bad as too less.
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