We make
money one way or the other, but how can we hold on to the money for a long time
and not consuming it all on our expenses. Been able to hold money down and make
more money with it is what everyone desires and to do this requires wisdom. It
is necessary to be financially stable and grow your income. Here comes the
wisdom in finance to make it stable and to grow it. Follow these simple tips
and you will get to understand the financial wisdom to live by;
Use the law of supply and demand to
your advantage. Most of us are familiar with the
law of supply and demand--the more there is of something, the cheaper it is;
conversely, the rarer the product or service, the more expensive it is.
However, other than when we get to a toy store before sunrise to get on line
for the latest fad toy that kids can't get enough of, we don't really apply the
law of supply and demand to our own lives--particularly our careers. For
example, if you're aspiring to do something that many, many other people want
to do (so much so that they do it for free, as a hobby) then it will be far
more challenging for you to make money doing it. On the other hand, if you do
something that most people don't want to do, or if you get very good at doing
something most people don't do all that well, then you can make a whole lot
more money.
If your goal is to make enough money
to retire early,
prioritize earning potential over job satisfaction, since you plan on getting
out of the rat race early, anyway.
Consider the types of jobs that pay extraordinarily well in exchange for hard
work, little psychological satisfaction, and a punishing lifestyle, such as
investment banking, sales, and engineering. If you can keep your expenses low
and do this for about 10 years, you can save a nest egg for a modest but
youthful retirement, or to supplement your income while you do something you really love doing but do not pay
much. But keep in mind that delayed gratification requires clear goal-setting
and strong willpower.
Recognize that time is money. Your ability to manage your time (and stop procrastinating) is a critical ingredient in
your ability to make money. Whether you have a job or are self-employed, keep
track of what you're spending your time on. Ask yourself "Which of these
activities make the most money, and which of them are a waste of time?" Do
more of the former and less of the latter, simple as that. When you're focusing
on high-priority tasks, get the job done well, and get the job done fast.
By working efficiently, you're giving your employer or clients more time, and
they'll appreciate you for it. Remember that time is a limited resource that
you're always investing. Will your investments pay off?
Jack up your prices. If you're providing a skill, service or product that is in
high demand and low supply, and you're making the most of your time, you should
be making good money. Unfortunately, there are many people who are too humble or fearful to demand that they get paid
accordingly. It's the pushovers in life who get taken advantage of and
exploited, so if you think you might be one of them, learn how to stop being
a people pleaser. If you work for someone else, ask for a pay raise or get a promotion, and if none of that pans out,
revisit your career options as described previously. If you're self-employed,
the first thing to do is to make sure
your customers and clients pay up on time--this alone can
substantially improve your income. Check your prices and rates against those of
your competitors--are you undercutting them? Why? If you're providing a
superior product or service, you should be getting at least the average,
unless your profitability depends on mass production, in which case you're
probably making a lot of money.
Be proactive.
Remember Murphy's Law: "Whatever can go wrong will go wrong." Make
plans, complete with as many calculations as possible, then anticipate
everything that can go wrong. Then make contingency or backup plans for each
scenario. Don't leave anything to luck. If you're writing a business plan, for
example, do your best to estimate when you'll break even, then multiply that
time frame by three to get a more realistic date; and after you've identified
all the costs, add 20% to that for costs that will come up that you didn't
anticipate. Your best defense against Murphy's law is to assume the worst, and
brace yourself. An appropriate amount of insurance may be something worth
considering. Don't forget the advice of Louis Pasteur, a French chemist who
made several incredible breakthroughs in the causes and prevention of disease:
"Luck favors the prepared mind."
Redefine wealth. In studies of millionaires, people are surprised to learn
that most millionaires aren't doctors, lawyers, and corporate leaders with big
houses and fancy cars; they're people who religiously live below their means and invest the surplus
into assets, rather than liabilities. As
you're taking the above steps to make more money, keep in mind that increased
income does not necessarily equal increased wealth. Most people who flaunt
their wealth actually have a low net worth because their debt to asset ratio is
high--in other words, they owe a whole lot more money than they actually have.
All of the previous steps have outlined aggressive strategies for making money,
but you'll never get anywhere if you have a hole in your pocket.
They say that a penny saved is a
penny earned. Learn to
save from the little you earn. What you save is what you can use to estimate
what you’ve gained so far.
If you're not self-employed and work
for a company, find out if they have a retirement plan. If you're lucky, employers will sometimes match
contributions you make into a retirement fund. Retirement plans also often have
the benefit of being tax-deferred. The longer you get to keep your money (and
make interest on it) the better. It's never too early to start planning for
retirement.
Know the difference between an asset
and a liability. The dividing line is whether it
puts money in your pocket, or takes it out. As much as you love your home, for
instance, it is a liability rather than an asset because you put more money
into it than you get out of it (unless you're flipping it or renting it out).
Whatever money you save, invest it in assets such as stocks, mutual funds,
patents, copyrighted works--anything that generates interest or royalties.
Eventually, you might get to the point where your assets are doing the work for
you, and all you have to do is sit there and make money.
Watch out for inflation chipping away at your assets.
We've all heard an elderly person describe the purchasing power of a coin in
their day. Inflation continues to make today's money worth less in the future.
To win the race against time and inflation, learn to invest your money in the
right places. A savings account might help you to keep up with inflation;
however, to stay ahead of the game you'll want to invest in bonds, stocks, or
some other investment that returns above the average rate of inflation
(currently 3%-4%).
Remain Blessed
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