The biggest challenge for people is having a proper understanding of money. Many people think it’s easier just to be in the middle class than it is to build wealth. However, building wealth isn’t as difficult as it seems if you have the correct mindset. Here are 5 reasons why you’ll be better off wealthy.
1. Live Within Your Means
A simple way to define wealth is that it is the number of days a person can live forward. If the average person were to stop working today, they have essentially dug and put themselves in a hole and would be in negative position. The problem with the middle class is that they rely too much on borrowing money because they have a good credit rating. By borrowing large amounts of money, most of their income goes to paying of debt and loans. Paying a mortgage, credit cards or making car payments are all examples. While utilizing loans and credit from banks may seem beneficial when building wealth, it is actually the opposite of wealth creation. What many people fail to see is that being poor might even be “better” than being middle class. When someone is in a poor situation, the money comes in and they just spend the money. They pay their rent for their house and car in cash in most cases because they couldn’t get credit. At least they are living within their own means. It you constantly allocate your income to the wrong things, you will never be able to successfully build wealth.
2. Stop Spending, Start Building
You should have the mentality that your money is not yours to spend. Instead your money is to pay the bills and start to build yourself some wealth. There is no better time than now to start building yourself a future financially. There are so many people where they’re not trying to prioritize building for their future or wealth. If you want to build wealth, then you need to treat money with the amount of respect it deserves. The money you earn should be invested and after you can use then you can use the return of investment for spending on yourself.
3. Automatic Investing
We need to set up an automatic plan where our money is transferred into an investment fund. The best thing about an investment fund is that you don’t even have to know how to invest it. At the beginning, all you have to do is set up an investment fund. All you have to determine the amount that you want to invest. The habit of doing it is much more important than the amount being invested. If you are only able to afford $10 a week, then do $10 a week. It doesn’t matter if it is a separate bank account or a stock trading account. We need that money to automatically go somewhere where you can’t touch it or take it out. By using automatic investments, you are paying yourself first. If you want to be rich, then wealth is easier if you pay yourself first.
4. Change Your Mindset Around Wealth
The final reason relates to the psychology behind wealth. Simply put, most people would rather look rich than be rich. Many focus more on impressing others rather than using their earned money to build their wealth. It’s more impressive to have an extra $100,000 in your bank, than it is to have a shiny, new car sitting in your driveway you can barely afford. We need to start developing the mentality where we put money of a higher value than impressing others. Stop worrying about materialistic items and start putting more of a priority on what will benefit our finances in the future. Remember: Buy shares, don’t buy shoes! If you want to learn more about the correct mindset around money, check out our latest article “5 Ways To Develop a Mindset For Thinking Rich And Building Wealth“.
Wealth takes ten years, and poverty and middle class takes forever. Therefore, we should focus on building wealth and less on alternatives. If we don’t start today, then we are only prolonging the financial freedom that we desire. If you want to learn more on how to build wealth, click this link to learn about my 30X Wealth program.