Yes, earning more is important. Not only for your bank account but for your career development. As you get better and have more experience you can earn more.
But we must stop thinking that the solution to all our problems is more money. We’re better off creating a strategy that helps us to manage money better. To do that, there are 5 money rules.
1. Desire Less
It takes more time to make money than to spend it. You work thousands of hours to make a certain amount of money. And then, you can drop it all on a new car, luxury vacation, watch, or anything else that you desire.
We all know that, right? And yet, we keep on spending money like it’s nothing. The easiest way to grow your bank account is NOT to spend it all.
2. Know-How The Economy Works
When does the interest rate generally go up? When does it go down? What are bonds? What’s inflation? When do you get inflation? What’s the market cycle?
Why do economies generally collapse? What’s debt? Who prints money? Why do they print money?
The point is that basic knowledge about how all this stuff works prevents panic. “Oh No! The market is down! What now!!” Panicking will not help you.
3. Avoid Personal Debt
Personal debt destroys your net worth like nothing else. To be clear, I don’t think there’s anything wrong with borrowing money.
If you want to start a business or do big real estate deals, it’s often necessary and smart to take on debt. But we must be wise about taking on debt. Like investing, there are rules to it.
One thing is sure: Never borrow money to buy a car, electronics, or anything else that goes down in value.
But when it comes to more complex things like growing/starting a business, investing in real estate, or even your education, think carefully before you go into debt. Remember that borrowing money is not free.
4. Save Money As Much As You Can
This is obvious by now. Desireless, avoid debt and save as much as you can. Personal finance is called personal finance for a reason.
Your money strategy depends on your age, personality, a place you live, education, experience, etc. A person who lives in Manhattan probably can’t buy an apartment. It’s overpriced, and renting is probably smarter.
Buying an apartment makes more sense in a city with lower real estate prices. In that case, renting is more expensive. No matter what you do, always make sure you have enough cash so you can invest if you spot an opportunity.
How much in savings is enough? That’s up to you. That figure makes you feel comfortable?
5. Have A Short-Term Strategy
This article is for people who do NOT want to become professional investors or traders. We invest for the long-term—not to make money today or even in a year.
My investment strategy is focused on the long-term. But that means I also need to generate income today so I can pay the bills. How do you do that? That’s your short-term strategy.
My personal short-term money strategy is based on improving my skills and creating multiple income streams. I invest a lot in my personal education because I realize more skills mean more earning power.
Also, I don’t rely on one big paycheck. Instead, I have multiple ways I generate value. That means less risk. If one income stream disappears, you’ll still have others.
A public speaker, debater and a marketing enthusiast with a profound interest in writing articles