[Music] imagine you could read all the most famous and popular books on finance that is you would actually be able to learn the most important money tips that have led people to their cherished wealth for many years and what if I told you that in all these books there are 10 of the most important rules that have actually made people rich I have studied more than a 100 books on finance and have gathered all the most important lessons for you in one place and have literally derived the formula for wealth that we are going to
talk about to begin with it may be worthwhile to know your initial Financial level the starting point so to speak take a close look at your accounts loans and assets and then calculate whether your balance is positive or negative essentially you are either in the black or in the red this is also known as your net worth don't worry if you find you have negative equity many people have loans and other types of debts we'll take care of that for sure the key is to understand where you are right now financially now it's time to
to talk about the emergency fund or more specifically everyone needs to have a financial safety cushion and yes this is something that all Financial experts agree on an emergency fund is money set aside to be used in the event of an unforeseen situation ideally when you need to stay afloat it is the emergency fund that you use instead of going into debt if you were laid off from your job if your car or something in your home breaks down or if you need money for an operation an emergency fund will come in handy Financial experts
differ on the size of the fund but if you can come up with an average number it would be around 3 to 6 months of your monthly salary it is important that this money is easily accessible and not invested in the stock market for example don't forget about your budget no matter how much you earn it is imperative that you keep track of your finances a lot of people hate the concept of a budget for me for example it seemed to be synonymous with taking the fun out of spending days and nights making spreadsheets of
expenses and income some people find it very tedious is to keep track of every scent and I understand you however understanding the main point of budgeting it is how you allow yourself to spend money on what is truly valuable in life instead of throwing your hard-earned money somewhere without having a clear plan there are several techniques for budgeting one common method is the 503020 rule its Essence is that 50% of your income goes to fixed expenses Rens food utilities Etc 30% goes to entertainments and 20% goes to savings remember having a plan and ensures that
your money goes to the best things in your life you can get rich just by cutting your spending many people will not like this fact but unfortunately it is true of course saving money has its own important place in the financial literature but most experts agree that saving money is not enough to get rich an equally important aspect is to increase your savings by increasing your income thus creating a surplus in simple words exceed your income over your expenses think carefully about how you will save invest and spend your Surplus each month the best way
to do this is to combine these three concepts to increase your savings buying things at a discount using cash back cutting back on your cell phone or home internet giving up that morning latte at the coffee shop these are all good ways to start saving money but it's much more important to recognize where you can make more money than you do now when you realize that other places can pay you more you will start to settle for a decent salary and the Prospect of its growth in addition to earning extra outside of work your savings
will grow over time and then there will be no need to sacrifice a cup of latte in the morning from your favorite coffee shop focusing on income growth is what can bring you much more value and money now let's talk about income diversification this topic complements the previous Point nicely in addition to actively growing your income don't forget to diversify your assets do not put all your eggs in one basket for example you can create an additional small business based on your existing professional skills a more advanced level is to invest in real estate the
goal is to start earning an income in addition to your day job why it's important extra money can provide security in uncertain Economic Times help you save for a vacation or wedding supplement your emergency fund or Investments I remember my situation with an unexpected layoff very well thanks to the extra income I had outside of my primary job I was able to maintain my routine for the next few months until I found a new job another common lesson is that not all debt is bad when I first encountered this thesis I was extremely surprised that
it existed at all but the more books articles and interviews I read about the rich and successful the more I found that not all debt is bad so remember this there is bad debt and there is good debt good debt is for example a home mortgage or a business loan the house will increase in value over the years both for sale and for rent and the store of course if it is in demand will generate income bad debt is outstanding credit card debt for clothes appliances weddings and so on bad debts will not help you
in the long run if you have bad debt first of all do not beat yourself up about it focus on paying it off as soon as possible experts advise you to pay off the higher interest debts first and then move on to the lower interest debts the next starting point for our prosperity with you is to set financial goals most Financial experts agree that set clear financial goals is critical this doesn't mean you need to plan out the next 5 years of your life but having an overall plan will help you make better decisions planning
a wedding in a year or two then you should start saving money in a high interest rate savings account but I advise you to keep the funds away from the stock market so you don't have to go negative in a downturn thinking about buying real estate if you have no idea how you are going to do that on your current salary contact real estate advisers do your research ask for a raise at your day job Etc the bottom line is that any strategy you come up with won't work if you're not motivated to implement it
and it's the goals you set that will provide you that motivation think about your future as you think about your present once you've mastered the basics analyzing your net worth creating a budget and building a reserve fund it's time to take your finances to the next level the key aspect of any path to wealth is investing investing is a great tool that can help you live WorryFree in retirement provide stability after having children and Achieve other long-term goals the sooner you start investing the more time your money has to compound this is where the magic
of investing really happens for those not in the know compound interest is the interest that acrs on the initial amount invested as well as the interest accumulated over previous periods Albert Einstein called compound interest the most powerful force in the universe and John Rockefeller called it the eighth wonder of the world in general the longer you let your money grow the more you will have when you need it here in lies the truth about the importance of thinking ahead perhaps the most subtle and crucial thread that runs through all of the financial books is the
importance of a positive money mindset our relationship to money is often complicated if you grew up without much wealth in your family it can be hard to imagine having the resources to invest or build an emergency fund I remember thinking that way myself thinking that large sums of money were beyond my control but the more I learned about finance and its possibilities the more I realized that wealth is available to everyone just think about it in a positive way give this video a thumbs up and show your willingness to get rich you will also be
supporting my efforts and this video will be seen by as many people as possible who will also be motivated to achieve new highs good luck and see you all soon this is the main channel on finance subscribe and get rich [Music]
