It’s impossible to go very long watching late night TV without coming across some slick sales man pitching the next great “Get Rich Quick” opportunity. While it’s not impossible to make your fortunes overnight, the odds are not in your favor.
The reality is; it takes time to accumulate wealth.
For most, it simply doesn’t come from entrepreneurial endeavors or financial risk, but rather making correct investment decisions and keying in on the right opportunities.
Along the way, we are bound to make financial mistakes, but the key is to minimize these mistakes and learn from them.
Below are 5 rules that you can follow to make sure you find yourself on the correct path to create slow, but continuous wealth.
Rule 1) Remember, it’s Net not Gross that matters
It’s easy to get caught up in the whirlwind of growing your gross income. This mindset however will limit your financial growth.
To create true and sustainable wealth, it’s essential to leverage your net income. Maximizing your net income by reducing your taxes is the same as boosting your gross income. Remember to reevaluate your net footing by frequently exploiting your write-offs early on.
Rule 2) Embrace economic pressure
You may find yourself in some difficult situations over the next decade that requires you to be uncomfortable in your financial state for a certain period of time. The key to weathering the storm is to remember that with risk comes reward and by not taking calculated investing risks; you are bound to remain a slave to low interest rates set by banks.
Rule 3) Transform Liabilities into Assets
The average family makes most of its purchases on liabilities. The wise decision is to invest in assets instead. Equity is the magic word when it comes to making purchases.
Here’s a great example of turning a liability into an asset – Let’s say you buy a brand new 40,000 SUV. The odds are great that it will lose the majority of its value in just the first three years, but it will eventually depreciate to nearly 20 percent of its original value by the time you get around to paying off the loan. Upon examination, you spent 40,000 and drove your car until it held little to no value.
As opposed to seeing this as a liability, see it as an asset. The same $40,000 SUV is available used and has eaten up its depreciation in the initial three years, and as a result, can be bought for half off that price. Additionally, it can be bought with a nearly identical warranty as a new one with little miles.
Rule 4) Develop residual income streams
Residual or passive income can be defined as money that comes from a business system implemented over a brief period of time, but which continues to generate money forever, without little to any effort on your part.
Most people, who adhere to the employment model (where you trade time for money), simply don’t understand the business philosophy of a system that produces income.
McDonald’s is a great example of a residual income system. McDonald’s produces massive amounts of cash for owners who rarely visit their own store.
Of course, you don’t have to own a major franchise to reap the benefits of residual income.
You can explore the benefits of getting into network marketing and affiliate marketing. The reputation of both of has been sullied by less than stellar marketing and poor support systems, but there is still tremendous potential to benefit financially from both.
Rule 5) Establish your Long-Term, Financial Strategy
The critical component of this rule is to design your strategy early.
There is simply no need or benefit to waiting a certain amount of time. It’s essential to set financial goals early and often to ensure maximum growth. Remembering to set financial goals annually, will enable you to sustain and grow, rather than spending years just getting by.
One strategy many financial strategists suggest is to think of financial goals outside of dollar amounts. For instance, strive to be in a 7 percent tax bracket one year. The next year you could set a goal of having 4 properties to rent instead of 2. Regardless of your specific plan, it’s paramount to have a clear focus of your financial goals before creating them.
There you have it, 5 simple rule’s you can follow that will set yourself up for continuous wealth.
While these will not get you rich overnight, there are very few things in this world that will, regardless of the hundred’s of get rich quick schemes you see every day.
So you can waste years trying “quick scheme” after “quick scheme,” or you can start implementing these small changes that in a few years or so, will have a significant impact on your financial well being.
– Scott Beckstead
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