The rules to making money are simple, basic and unchanging. No matter how many books exist on the subject, written by however many men who made their fortunes in various ways, they follow the same seven basic principles.
1. Realize a portion of your income is your own to keep. Easier said than done. You're thinking, "Of course a portion of my income is mine to keep. All of it is mine to keep!" Not true. Your expenses will always equal your income until you actually sit yourself down and realize a portion is yours to keep.
How can you act on this idea? Come up with a reasonable percentage of money you are willing to put away every time you get paid. This concept is called paying yourself first. The moment you get your paycheck, for example, put away at least one-tenth of the amount - never less. How much is one-tenth? For most, it's dinner. You hardly miss it. After placing that one-tenth into a high-yield savings account, like INGDirect.com, go about your life and forget about it. That money will grow rapidly - and you'll wonder how you couldn't have done it before.
2. Don't work for money - make it work for you. Many people work most of their lives for money. This is not the way to master your finances. With your one-tenth growing, find a way to utilize it so it makes more money for you. George Clason put it bluntly: "Make money your slave." With a good CD, money market account or another well-studied and stable investing platform, make that money work around the clock for you. Over time, it will yield more money.
3. Educate yourself through people who have become wealthy themselves. Advice is free. Taking five minutes from a busy investor is worth far more than asking your broke buddy about the hopeful bounty of his latest quick-money hustle. Of his "Rich Dad," Robert Kiyosaki noted that often ask him for a job but rarely ask how to get rich. People who made their own fortune are often happy to pass advice along; they are so rarely asked by someone who expresses a genuine interest. Experienced investors can also help you avoid mistakes, and their advice will be worth far more than the two minutes it cost you to ask.
4. Avoid the fast hustle. There are droves of people - sometimes even friends or family - who will knock at your door with a hustle: a concept or business that promises a great return over a few weeks or months, in exchange for some cash up front. These types of investments never hold up for the long-term. Wealth is a mindset, and educating yourself for it takes a lifetime, not three hundred dollars up front.
5. Minimize liabilities, maximize assets. It's easy to get excited about the money you accumulate, but avoid blowing it all on liabilities like a brand-new car you don't really need. Did you know a car loses forty percent of its value the moment you drive it off the lot? Minimize liabilities in favour of assets, because assets will continue to make your capital work for you. If you're living in an overpriced apartment, consider a condo. Real estate appreciates more dependably and more prominently than any other investment you can make. These are small changes that will begin to make a big difference in your life as time passes.
6. Prepare for the future - for you and those you love. Put money away if you imagine you'll ever have kids - kids will need college. Put money away to prepare for the unforeseen - you won't be young forever. The best time to make money work for you is when you have the energy to make money at all - it is not when you're reaching the end of your rope. Saying no to many of today's impulses greatly increases the likelihood that you will have comfort and security when you need it the most.
7. Don't sacrifice your character, but be judicious with others. I've heard it said that it's an easy thing to make money, but another game altogether to make money without negotiating your values. There are generally three types of people who appear upon the arrival of good fortune: the person who is never satisfied with what he gains, but laments every loss; the person who is careless about expense, offers no respect to those who helped him along the way, and possesses no regard for the future; and the person who lives within his means, is generous but wise about spending, and knows how to make money multiply at a pace so comfortable he simply can't spend it fast enough. This last is the rarest of all.
It is difficult to strike an economically sound balance between necessity and desire. It is difficult not to be fool when you have people pulling constantly at your sleeves, calling you selfish or claiming you should remember who your friends are. It is difficult not to be a miser in an effort not to be a fool. Be careful to discern the difference between people of integrity who will return your favour with dividends, and people who think they are entitled to a cut of your pie just because their desires are great. The world is full of this latter. Poverty, like wealth, is a mindset, and no amount of favours or money will help a person possessing it.
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