Focus On These 3 Things To Become Wealthy
There is this misconception out there that you have to make six figures a year or more in order to become wealthy. In all reality, wealth, and more specifically, building wealth, aren’t all that hard to achieve, and you don’t need to make a lot of money in order to do so.
When it comes to becoming wealthy, it’s not rocket science. Wealth doesn’t look the same for any two people. Wealth is a state of mind that is going to look different for each and every individual.
Now, don’t get me wrong, if you want to become wealthy, you still need to work hard for it. What I’m trying to get at, however, is that no matter where you are at in life, you can become wealthy.
So how do you become wealthy? Here are three things to focus on if you want to become wealthy.
1. Live Below Your Means
If there were only one thing to focus on if you wanted to become wealthy, it would be this — live below your means. No matter how much money you make, or no matter how many streams of income you have, you are never going to achieve wealth if you are spending more than you’re earning.
It’s really that simple.
In order to become wealthy, you have to be making more money than you’re spending. If you spend more money than you make, you’ll be in debt for the rest of your life. On top of that, you’ll have to pay the banks more than you’re spending, thanks to the notoriously high interest rates credit cards have.
Now, if you don’t think you can spend less than you earn because you don’t make a lot of money, no problem, you can start a side hustle and make more money. Seriously, there are so many different side hustles you can do simply from using your phone. So the excuse that you don’t make enough money isn’t valid. We all have the same 24 hours in a day, so if you truly want to live a wealthy life, you’ll find a way to make it happen.
99% of Personal Finance Comes down to This: Income > Expenses
Here’s how you can widen the gap and build wealth
2. Have Multiple Streams of Income
If you were to lose your job tomorrow, would you still be able to live a relatively similar lifestyle as the one you’re currently living?
For most, the answer is no. In fact, just the thought of losing your job likely causes a significant amount of stress because it’s your only source of income and you’d be screwed without it.
Here’s a fact that surprises most individuals: the average millionaire has a minimum of seven different sources of income. Yes, you read that right, SEVEN!
Why, you might ask?
Well, the more streams of income you have, the less reliant you become on one specific stream of income. Any of us could lose our job tomorrow. Like that’s just a fact we all have to accept. Millionaires realize this and prepare for something bad to happen before it actually happens. That way, in the case, that something bad does actually happen, they’ll be prepared.
It’s a lot easier to continue to live a relatively normal life when you have established multiple streams of income. If you do lose one stream of income, you still have six different sources there to support you, so the financial burdens that comes with losing your job won’t impact you as significantly as it would for someone who relies on their job as their only source of income.
3. Make Sure Your Assets Are More Than Your Liabilities
This is another pretty concept to grasp (again, becoming wealthy isn’t rocket science), but it’s to make sure that your assets are worth more than your liabilities.
So what is an asset? An asset is anything that can be used to generate cash flow, reduce expenses, or provide future economic benefits. Assets can include:
- funds in a bank
- stocks, CDs, bonds, mutual funds
- retirement accounts
- real estate
- personal valuables
- any kind of money you’re owed
Liabilities, on the other hand, are any kind of debts you owe to another person or company. Liabilities can include:
- credit card debt
- student loans
- personal loans
- auto loans
- anything that you owe money on
The goal here is to make sure that your assets are worth more than your liabilities. You want to be making substantially more than you owe. The more you can achieve this, the easier it will be for you to become wealthy.
This isn’t rocket science.
As you can see, it’s actually pretty easy. Once you start living below your means (which seems to be the hardest part for most of us), then you can start achieving your goal of living a wealthy life.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.