1 will be wealthy 4 will be financially independent 15 will have some savings set aside 80 will be totally dependent on pensions, employment, social services, or relatives. There are a few reasons why most people miss out on the pot of gold at the end of the rainbow. To accumulate wealth, you need to have your money working for you. It’s not enough to just keep earning a large income. You are only wealthy when your money is creating more, money for you. This is the key to all real wealth. Wealth can only be created when you have cash flow from other sources. Your money is earning you more money in the form of interest, dividends or income. The best way to begin any wealth-building program is by acknowledging your starting point. Take control of your finances. Get a clear picture of where you are now. It may look dismal to you, or it could be better than you thought. The important thing is that you know where you are at this point in your life. Wherever you happen to be, your conditions will definitely improve if you continue to take action.
How do you determine the actions you should take? Getting clear about where you are is a good start. Find two blank sheets of paper. On one, list all your expenses. Include everything you can think of. Use the other sheet to list all sources of income that you currently have.
Expenses being: mortgage or rent, utilities, telephone, food, fuel etc… Income being: earnings from employment, investment income, etc…
Now once you have written everything you can think of and you have to include everything. You will only be cheating yourself if you leave things out. Just have a look over the list and if you have more income’s than outgoing’s GREAT! If not then you have to work out why?
Now begin to closely monitor where your money is going. Keep a small pad or booklet with you at all times, and every time you spend money, record it. I know this might be a bit boring or silly but if you want to find out why you always seem to be broke then you need to find out where all your money is going. Keep track of everything, even minor purchases. This exercise may be quite an eye-opener for you. You could be surprised to find out how money is leaking from our wallet or purse. The key is to identify the source of those leaks. When you can actually see where you’re spending needlessly, making the correction is easier. Pay particular attention to money spent on clothing, dining out, coffee and snacks. These are areas where many people spend more – sometimes much more – than they realize. The idea here, is to get a good idea on exactly where all your money is being spent. This takes a little effort on your part, but what it reveals to you may be invaluable in building a sound foundation for personal wealth.
1. Develop a regular savings habit where you save 10% of all you receive.
2. Pay down debts that are costing you big money, particularly credit cards, and always the ones that cost you the more interest first.
3. Get rid of excess credit cards -consolidate into one or two cards only. Transfer them to interest FREE cards for 6, 12 or 18 months
4. Begin to establish a cash reserve that will get you through unexpected difficulties. House hold goods breaking down. Boiler, washing machine. Car breaks down etc…
5. Pay cash instead of financing purchases. Only use money you have sat in the bank. That dress or nice hat will still be there next month. Only spend money if you have it.
6. Seek expert advice before you invest (all wealthy people do this). Now that you know where you stand, it’s time to move forward. It’s time to take control of your finances. Follow these six steps and you will begin to gain mastery over your money and create a strong base from which to expand.