Money is a game that is governed by laws, the rich understands how to play it and keep getting richer. You must know how to play this game to win. I will be sharing some tips I practice that are working for me. No matter how much money we have, even if it is a billion dollars, it will eventually run out. The main issue for lots of people is that they run out of money before their next paycheck. People are poor because they don’t understand the basic laws governing money. Here are some guidelines that will be of help:
- Money is a seed: Money functions as a seed, when you put your seed to work, it multiplies. By disuse, it depreciates and loses value. When you eat all your seeds during planting season you won’t have any seed to plant when it is time to plant thereby losing out in harvest. For example, if you take dancing classes and then refuse to practice, you lose the obtained skills. The same is true with capital.
- Understanding the difference between assets and liabilities: The difference between assets and liabilities is extremely important to grasp. The poor acquire liabilities while the rich invest in assets. Asset can be defined as an economic resource that puts money back into your pocket, income that also appreciates. While a liability is something you own that requires expenses on your part to maintain. Liability is also something that depreciates. When you have a good understanding of asset and liability it will guide how and on what you spend your money.
- Understanding the difference between financial discipline and instant gratification: It is no surprise that business people invest billions of dollars into advertisement. They do this because millions upon millions of people watch commercials and then run to the stores to give their money away on the things they have seen advertised. Money is currency and it flows from hand to hand; the rich get richer and the poor get poorer. That is why the most important step to financial freedom is through savings. True investment begins with a good saving culture. After savings, then you will have something to invest and multiply.
- Have an investment mentality and not consumer mentality: As soon you imbibe the savings culture, you invest; the next question you should ask yourself is how can I keep it? Keeping money does not mean burying it somewhere. Invest your money in assets that appreciates. You can read my write up on understanding passive income here http://wp.me/p3tXYw-1X for broader understanding.
- Understanding money game: The person with power over money will never be poor. Those without that power tend to pursue flamboyant lifestyle, thinking that their extravagant lifestyle and careless spending is what wealthy people do. How so wrong! The rich are very accountable for their money.
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