8 Tips for Saving Money! That’s what the RICH do!

According to statistics, most people live paycheck to paycheck.

People believe that the main reason is low income. But such an opinion is erroneous. Often, even those who earn hundreds of thousands of conditional units take out loans, the debts on which have not been closed for years. This is due to the lack of financial literacy among most people.

If we briefly describe the main thing in the topic of money and its multiplication, then we can formulate 8 key rules.

If we reduce the whole essence of the accumulation of wealth to a simple one, then we get 2 principles:

– Wealth Foundation #1 – Your expenses are less than your income.

Wealth Foundation #2 – Invest all excess income in assets that will give you passive income.

Either you control money or it controls you. To do this, know your money in person. Know how much you spend and how much you earn. Make your budget every month. As soon as the salary has arrived on the card, write down all the expenses and the amount of money that you can put aside. Write everything down to c.u. Money for food, education, travel and telephone. Set aside in advance for gifts to loved ones, even if the holidays are still far away. Immediately indicate the amount that you will spend on yourself. Spend this money on anything. Don't be afraid to lose them. They are made for entertainment.

And most importantly, set aside 10% of your monthly income. This 10% is easy to find if you keep track of your expenses for the month. About 30% of any person's money is spent on unnecessary nonsense. Create a reserve for unexpected expenses. This is a reserve of confidence. Each month, the reserve stock should increase.

Ideally, multiply your average monthly spending by 4-5 months. This amount must be kept in case of force majeure.

“Don't save what's left after spending, but spend what's left after replenishing your savings." Warren Buffett.

Create passive income – a smart person works for money, a wise person has money working for him.

Approximately so it is possible to describe a paradigm of the passive income. If you did everything right, diligently set aside money, then over time you will accumulate a small amount of capital.

Now you have come to the most important step for your financial freedom – creating a source of passive income.

Yes, not everyone can save a lot, but there is no need for this. The most important thing is to build capital. Even if bit by bit. And then, if you have been patient, then the magic of compound interest will do its job.

For example, let's imagine that you have 10 thousand conventional units and you decide to invest in stocks. Every month you replenish your capital by 3 thousand conventional units, this is available to almost everyone. Stocks, on average, bring you a modest 15% per annum, and over 10 years of patient accumulation, you will accumulate 867 thousand. And in 20 years, the same amount will turn into 4.5 million. Just imagine! And if you invest at a more favorable percentage and in dollars, then you can safely attribute a zero.

Yes, for many it seems complicated and incomprehensible, but you can always take the advice of a professional.

Buying a car – from the point of view of financial literacy, you should not buy an expensive car, of course, if chickens do not peck at your money, then why not? But if you are an ordinary person, then first of all think with your head. The price for such an acquisition should not exceed 4-5 of your monthly salaries. If the car is more expensive, then sorry, but this is not your level. Maintenance of such a machine will cost you a pretty penny. Do not get into debt and bondage, better think about how to earn more in order to drive a cool car?

Even the founder of Facebook lives economically in these aspects of life. One example is his car, a $30,000 Acura sedan. For a moment, he can afford absolutely any car or even a helicopter. Instead, he chooses a modest and practical car.

“If you buy things that you don't need, then soon you will have to sell things that you need.” Warren Buffett.

Buying an apartment – to buy an apartment or not to buy? That's the question. Buy only what suits your needs. Warren Buffett is a classic example of this golden rule, still living in Omaha, Nebraska, in a house he bought in 1958 for $30,000. Despite a fortune in the billions of dollars in the account, Buffett sees no point in living in an incredible mansion, he feels happy in a modest house of 5 rooms.

What if we told you that it is cheaper to live in a rented apartment than to buy your own home? It's hard to believe, but it's true. This can be easily calculated.

Suppose that a new apartment costs 2 million 700 thousand conventional units. Instead of buying an apartment, we invest this money in shares at 20% per annum, it turns out that we earn 45 thousand conventional units per month from this capital. Let's subtract from this amount 20 thousand conventional units for renting an apartment. It turns out that without buying an apartment, we increase our capital by 25 thousand conventional units every month.

Mortgages are a similar story. Do not be lazy and count yourself.

“Keeping your money costs more work than getting it.” Michel de Montaigne.

Consider not only the cost of the purchase, but also its value – you probably know how much your working hour costs. And for the majority, this same hour will be spent at a boring job. Try to evaluate any purchase in working hours, for example, a large chocolate bar costs 30 minutes at an unloved job, over those hours, you will spend a month in your hard labor, but for a large TV you will definitely have to work hard.

When you want to spend money on some trinket that you cannot do without, remember this method. Feel the real price of the purchase. Perhaps this will help you avoid unnecessary expenses and save somewhere.

“Beware of petty and vain expenses, for a small leak can sink a large ship.” Benjamin Franklin.

Increase your income – take care of increasing your income. Do something every month to increase your income by at least 1%. Every day take one step to achieve prosperity, small, tiny!!! But do it.

Discipline and attitude are far more important than where you start from. Each person has his own way – there can not be the same solutions. Someone can ask for a raise from the authorities, someone is better off studying for another profession, someone will move to Moscow or drive off to the North, someone will start a blog, knit sweaters to order or open their own dumplings.

There are many ways to earn money and everyone will choose their own. All you need is desire and perseverance. If you are not satisfied with the level of comfort, analyze yourself, look for talents in yourself and choose the right way to increase income.

“It is better to be ashamed of your wealth than to be proud of your poverty.”

Refuse loans and debts – a financially literate person does not take consumer loans, which significantly hit his wallet. He always chooses to be patient and accumulate. Can't accumulate? How are you going to pay the interest on the loan? Yes, there may be exceptions here: perhaps you are buying a thing that is necessary for work, perhaps you are investing in an asset that can be sold for more and earn back interest.

For example, acquaintances are selling a car urgently and for next to nothing. But a loan for a wedding, for an iPhone, for a vacation is the bottom of financial literacy!

“Money hasn't made a fool of anyone; they only make fools out.” Frank Hubbard.

Give up negative thinking – “If money doesn't bring happiness, then give it to your neighbor.” Jules Renard

We were often told that money is evil and happiness is not in it, but you must admit that it is better to be sad in a Bentley than in a minibus. Deal with your beliefs about money. While there are a lot of cockroaches in your head, you will subconsciously drive money away from yourself. Money is usually given too much attention by those who do not have it. And in the mode – I'm poor, but I don't steal. If you don't get rid of the poor mindset, you won't see big money. Money gives power, not over other people, but over yourself. Money allows you to be the master of your life. Buy freedom and leave a hated job, provide for a family and give joy to loved ones.

Isn't that what many of us dream of?