Most people who overspend their income do so in one of three ways: too much house, too much car, too much entertainment. However, what most of us who are ahead of the curve know that to build wealth and attain true financial freedom there are some tried and true strategies that work and are symbiotic. Financial freedom is built in daily habits.
1 – Turn your surplus into an assets.
If you have savings don’t simply think that investing in a savings account will cut it. The truth is the interest you receive is generally offset or even eradicated by inflation. For instance, the inflation rate in 2019 has bounced from 1.5% to 2.0%, but the average savings interest rates in the US are currently well below the inflation rate. So, saving money means you’re not growing your money at all. In fact, the money loses value as inflation outpaces your gains. It’s best to look into other ways to build assets with those hard earned savings.
2 – Financial future is determined by your expenses.
A good rule of thumb is to save half of what you earn. Many people are no where near these percentages, however you may need to ask yourself – do you really need a new car or that big house? Many expenses, although necessary, often indulge towards the luxurious. It’s not to say we cannot treat ourselves, choose wisely on what you spend is all!
3 – Spend to get rich and offset your expenses.
So you like the big house on the hill? No problem, acquire the house and see it as a rental income producing asset to pay off your expenses and liabilities for the big house on the hill. If you like it and gotta have it, why not make it an investment and start also building your wealth with a rental income producing property.
4 – Buy things you enjoy, while building your wealth in the process.
Some people collect purses, some collector cars, others make their fortune in real estate. If you enjoy it, and it’s lucrative, why not pursue it!
Remember, building wealth isn’t about keeping a large amount in your bank account, it’s about purchasing power and what kind of lifestyle you can build for yourself where you don’t have to worry. Cash flow is king and if you are making your money work for you, you are on the road to success.
