How and why the rich get richer?
In 2016, the American company GOBankingRates conducted a study, where it turned out that 2/3 of US residents have less than $ 1,000 in savings, and another 35% have no savings accounts at all. In Russia, the situation looks more depressing. A 2015 Sberbank study showed that less than 1% of Russian citizens control half of all bank deposits, and 85% of the total increase in deposits depends on 3% of Russians. In fact, only the wealthy population of Russia is engaged in investing money, and it seems that low incomes close the way to financial instruments and capital growth.
But you can achieve what you want and increase your own profit. If you listen to advise on how the rich get richer and manage their money.
1. They pay themselves first
People who think saving is as important as paying monthly utility bills are closer to wealth. To build up your savings on an ongoing basis, pay yourself first. Set aside a fixed percentage of any income regularly. Start with a small amount of 1% of earnings and gradually increase it to 10-20%.
Treat this the same way you would other mandatory and important accounts. Make this transfer automatic in your banking application.
2. They avoid inflationary lifestyles
People are tempted to spend more when they receive a pay increase or a bonus. Raising income makes a person feel like they deserve a spike in spending and can afford an expensive item. Needs do not disappear but become more grandiose. Rich people know to avoid this lifestyle during periods of rising income and invest in themselves.
Instead of spending money on another pair of athletic shoes, increase your savings account, buy stock in a company, or invest in education.
3. They are humble
In the digital age, people want everything at once. Some use loans to quickly buy a dream, thereby dooming themselves to debt red tape. In the United States, on average, a family has $ 16,000 in debt. And the same Sberbank study showed that the number of mortgage loans per year in Russia is about 3 million, and consumer lending generally covers 40 million people.
Successful people live modest lives despite having an income to buy many luxury items. Famous investor and one of the richest men on the planet, Warren Buffett still lives in the house he bought for just $ 31,500 almost 60 years ago. Take an example from him. Stick to a modest lifestyle. So, income will grow and help to achieve financial goals faster.
4. They set specific goals for themselves.
Spending that does not exceed income is the key to staying financially afloat. Successful people adhere to this rule. They define the goal and draw up a financial plan to achieve it. This automatically reduces unnecessary costs.
When you make a major purchase, review your budget. Find out the exact amount of income and basic spending. So, you can "cut" unnecessary and allocate more funds for the goal. To speed up the process, try increasing your earnings. See what skills are in demand on freelance exchanges, Perhaps your abilities can actually be used remotely.
5. They check to spend regularly.
Rich people regularly review their spending. By monitoring them and making changes promptly when more economical options are available, they save more money and keep the budget up to date. So the rich get richer.
Don't pay the expenses out of habit, control the situation:
• Check the tariff on your phone. Check out the new offers from your operator, they may be more profitable.
• Call the bank and find out if it is possible to lower the interest rate on the loan.
• Get the public transport pass you use every day. It will be cheaper than buying tickets every time.
• View promotions and discounts. Follow the offers for cashback services.
6. They allocate funds for an emergency fund
The emergency fund is a key component in the arsenal of a successful person. It eases the financial burden of unforeseen expenses and helps reduce stress.
Unlike the amount you set aside for a specific purchase, the emergency fund is used exclusively for events such as medical and household problems, job loss and economic crises. People with extreme savings avoid debt and “close” problems much faster than those who are not ready to postpone such an issue.
7. They make money work for themselves
The rich get richer because they make money work for them. Hard work increases income, but if you miss a day, you will lose some of your monthly earnings. This is because you are working for money.
So that your income does not depend on the time spent on it, use classic stock market instruments and investment opportunities. Stay on top of financial events and study the books that investors read. Consider buying stocks, bonds, or ETFs.
