improve their life situation, and making sure they know where their money is going.
Being productive with their time. You won’t find many wealthy people watching soap operas four nights a week. They will be doing something to make their life better. This could be creating or working on a business. It could be exercising. It could be inventing a new way of doing business, or finding new customers. This doesn’t mean that wealthy people never relax and never have fun; it just means that they don’t spend major time on minor things.
Spending less than they earn. Most wealthy people will have a savings plan, and save a minimum of 10% of their income on a monthly/weekly basis.
Not using credit unless it’s to buy assets. Most wealthy people like to spend cash rather than credit. They know that if you use credit, everything you buy costs more money as you’re paying interest on it. A TV that costs £500 costs £500 if you pay cash. If you buy it on credit over 3 years at a 20% interest rate, it will cost you £668. Same TV, different price.
They buy assets instead of liabilities. An asset is something that can provide an income or provide capital growth or both. If you buy a car, that is a liability as it costs you money. If you buy a taxi, that is an asset as it makes you money. If you buy a holiday home, it is a liability as it costs you money. If you buy a buy-to-let home, that is an asset as it makes you money.
They control their expenses. Even though they can afford the best, they don’t feel as though they have to join the best clubs, or drive the most expensive cars, or wear the most expensive clothes. They are more focussed on becoming, and staying wealthy, than looking wealthy.
Paying themselves first. This means that a part of all they earn they keep. Keep in savings, or investments. This should normally be 10% or more. This also means that you do it EVERY time you get money, whether it’s earned, given, inherited, won etc.
Keeping strict accounts. Wealthy people know what they are doing with their money, and where it’s going. That’s why they’re wealthy.
Which of your habits do you need to change?
Let’s create a strategy!
Chapter 20
Wealth Strategy
Ok, so let’s start where you are right now. The most important thing for you to do is to get out of debt. Debt is a siphon hose on your income. If you earn £2,000 a month, and have to pay £750 a month out to your creditors, your life will be hard. If you earn £2,000 a month, and you have to pay zero money out to your creditors, life will be so much easier.
Let’s look at your financial situation right now.
Take a sheet of paper, and draw a vertical line down the centre of the page. Now cross it with a horizontal line across the centre of the page. You should now have four squares or rectangles of approximately the same size.
In the top left hand square, at the top, and in the centre, write the word Income, and underline it.
In the top right hand square, at the top, and in the centre, write the word Expenses, and underline it.
In the bottom left hand square, at the top, and in the centre, write the word Assets.
In the bottom right hand square, at the top, and in the centre, write the word Liabilities.
In the Income grid, make a list of all of your monthly income that you are due for the month following this one. This should include any income from your main source (job), any part time work, any sales you make on eBay for example, and any other money that you are due to receive. This includes things such as benefits or child support for example.
In the Expenses column, write a list of everything you are due to pay out next month. This should include everything. Mortgage, rent, taxes, credit card payments, loan payments, insurances, satellite TV, gas and electric, utilities, mobile phone.
Now total up the sums from these grids and you should have two
Being productive with their time. You won’t find many wealthy people watching soap operas four nights a week. They will be doing something to make their life better. This could be creating or working on a business. It could be exercising. It could be inventing a new way of doing business, or finding new customers. This doesn’t mean that wealthy people never relax and never have fun; it just means that they don’t spend major time on minor things.
Spending less than they earn. Most wealthy people will have a savings plan, and save a minimum of 10% of their income on a monthly/weekly basis.
Not using credit unless it’s to buy assets. Most wealthy people like to spend cash rather than credit. They know that if you use credit, everything you buy costs more money as you’re paying interest on it. A TV that costs £500 costs £500 if you pay cash. If you buy it on credit over 3 years at a 20% interest rate, it will cost you £668. Same TV, different price.
They buy assets instead of liabilities. An asset is something that can provide an income or provide capital growth or both. If you buy a car, that is a liability as it costs you money. If you buy a taxi, that is an asset as it makes you money. If you buy a holiday home, it is a liability as it costs you money. If you buy a buy-to-let home, that is an asset as it makes you money.
They control their expenses. Even though they can afford the best, they don’t feel as though they have to join the best clubs, or drive the most expensive cars, or wear the most expensive clothes. They are more focussed on becoming, and staying wealthy, than looking wealthy.
Paying themselves first. This means that a part of all they earn they keep. Keep in savings, or investments. This should normally be 10% or more. This also means that you do it EVERY time you get money, whether it’s earned, given, inherited, won etc.
Keeping strict accounts. Wealthy people know what they are doing with their money, and where it’s going. That’s why they’re wealthy.
Which of your habits do you need to change?
Let’s create a strategy!
Chapter 20
Wealth Strategy
Ok, so let’s start where you are right now. The most important thing for you to do is to get out of debt. Debt is a siphon hose on your income. If you earn £2,000 a month, and have to pay £750 a month out to your creditors, your life will be hard. If you earn £2,000 a month, and you have to pay zero money out to your creditors, life will be so much easier.
Let’s look at your financial situation right now.
Take a sheet of paper, and draw a vertical line down the centre of the page. Now cross it with a horizontal line across the centre of the page. You should now have four squares or rectangles of approximately the same size.
In the top left hand square, at the top, and in the centre, write the word Income, and underline it.
In the top right hand square, at the top, and in the centre, write the word Expenses, and underline it.
In the bottom left hand square, at the top, and in the centre, write the word Assets.
In the bottom right hand square, at the top, and in the centre, write the word Liabilities.
In the Income grid, make a list of all of your monthly income that you are due for the month following this one. This should include any income from your main source (job), any part time work, any sales you make on eBay for example, and any other money that you are due to receive. This includes things such as benefits or child support for example.
In the Expenses column, write a list of everything you are due to pay out next month. This should include everything. Mortgage, rent, taxes, credit card payments, loan payments, insurances, satellite TV, gas and electric, utilities, mobile phone.
Now total up the sums from these grids and you should have two
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