Have you ever wondered why rich people have more money? Most people think that they were fortunate enough to come from a rich family or to gain their fortune by fraud. I’d rather be honest, money isn’t that important, right?
For most rich people, these statements are not true. They worked very hard to achieve their goals, which enriched them. Most importantly, they have learned how to manage their money and know what to do to save and grow their wealth.
We have to admit that money is a very important part of our lives because it affects every area .
- We can’t buy the baby the toy you’ve been dreaming about for a long time.
- We do not have the opportunity to travel abroad and see the world.
- We cannot renovate the apartment or it is very difficult to get the money together.
How good it would be if these things were ever possible.
The secret to managing money is not taught at school. This can be learned through books or the Internet.
Today we will look at how the top 1%, that is, the financial habits of the richest people, differ from ours .
Let’s not push the word any further. Let’s see what the top 1% does in order to have a good financial position . You can take these easy steps into your life, and if you do them continuously over the long term, you can get into that 1%.
Cost monitoring and budgeting
This is the first and most important thing you need to do. How can you change something you don’t know? You can only create a better financial situation for yourself if you know what you’re spending your money on.
Most people do not pay attention to this. He doesn’t know how much he spends and what. All you know is how much you will be paid in a month, and will manage that amount until you receive your next payment. This is how it goes from month to month. Successful people do not manage their money this way.
In the next two months, follow your incoming and outgoing spending.
You can do this with a piece of paper, but you have a better chance of forgetting certain things. The easiest and most effective way to track your spending is to use a phone application. You can easily add in how much you spend on a purchase and assign a category to the release. Using this information, the program generates various statistics to help you identify where you are spending most.
- Make a note of each forint you spend.
- At the end of each month, look at what you spent on your money.
- Do you really want to spend on things you need, or are there areas where it’s better to spend less? Did you buy something on impulse or buy something you didn’t need?
You can save at least 10% of your revenue by keeping track of your expenses and avoiding spending on things that are unnecessary.
Create an emergency fund
Every rich person has an emergency fund to cover at least 3 to 6 months of expenses. Use the money saved to create an emergency fund.
If you keep track of your expenses, you will know exactly how much you are spending each month. This way you can determine how large this emergency fund should be. Your goal should be to save this money as soon as possible.
Do you see a nice television that you wanted to buy a long time ago and it’s just been shipped? Is your phone going slow and will the new iPhone launch this month? Do not use the Emergency Fund Reserve for such expenditures!
Only save money when you have unexpected, urgent costs and no other solution. The ones you would borrow.
For example, if you spend $ 100,000, you won’t starve, defer your rent, and you won’t need a loan. It won’t be easy to save the equivalent of 3-6 months of spending, but if you do, you will surely be covered in difficult times.
Repay your high-interest loans
If you have bad credit, that is, that you did not borrow for investment and they are not making money for you (most people have such credit), get rid of them as soon as possible.
Once you have established an emergency fund, begin to fully repay the loans. There are two ways to do this:
This is the best way to repay your loans, as this is the best way to get away with it. The point is to settle the loan with the highest interest rate. The one that is the most expensive. If this is successful, continue with the second until you pay off the last lowest interest rate loan.