The phrase “generational wealth” has become more and more common lately. In order to achieve that, we first need to begin generating wealth for the current generation. So, if you haven’t heard Kindle recently promoted their Kindle Unlimited upgrade for $0.99 for 3 months. Since then I’ve been reading like crazy and therefore have a lot that I want to share! Some books that I’ve been reading and highly recommend include:
The Simple Path to Wealth – JL Collins
Legendary Advice – Andrew Wood
Practical Law of Attraction – Victoria M Gallagher
Financial Freedom with Real Estate Investing – Michael Blank
Alright so in an attempt to summarize the most valuable tips that I got from these amazing books and other like resources, I’ll go over the top 10 ways that shifting your focus this year will prepare you for the wealth that you’re looking to generate.
2020 is a new year and more importantly a new decade;) If you’re looking for that sign to start that new business, get that certificate, take the class, make that product, or whatever… THIS IS IT! I’m personally a closeted spiritual but I think most people can agree that there’s just general energy of excitement that everyone has for this year. And I hope we all get the blessings that we’ve been waiting for! So, let’s start by making the shift we need to start 2020 right. Here are the top ten tips!
1. In Order to Begin Generating Wealth You Have to Understand that Wealth is not income
Generating wealth sounds a lot like generating income. So for obvious reasons let’s define the difference. Wealth is the value of your total assets (Home, car, jewelry) minus your liabilities (mortgage, car note, credit cards). Income is just the amount of money that you make each year. So wealth is having money while income is spending money… Income is instant and wealth is gradual. Get it? (If not, comment below and I’ll clarify).
This graph shows the difference between income and net worth. The graph below also shows you that wealth is increasingly reliant on your income until the age of about 36-39. This just means that if you do it right, by that age you should have made the right investments to accumulate wealth regardless of how much income you make annually.
**DQYDJ graphed the correlation between income and net worth. To learn more their research about net worth and income click here!
2. You can’t budget your way out of poverty but you can invest!
Budgeting is useful when it comes to reducing your expenses and allocating money for various reasons. When it comes to increasing your wealth the best place to start with is your income. The second best place is an index fund.
JL Collins explains this thoroughly in The Simple Path to Wealth… but basically he recommends investing in passively managed mutual funds and ETFs. The bet is that the stock market has always survived and climbed in spite of every disastrous market crash and will continue to do so. With average annual returns of S&P 500 around 7%, you can expect this return when investing in one of these funds.
3. Build the necessary skills for a digital world
This is probably one of the best times to be an entrepreneur and to be a YOUNG entrepreneur at that. Last time I checked there are 1,700 new millionaires every day. And do you want to know what they’re doing? YouTube, Instagram, opening retail stores, and digital marketing. The skills that you need to succeed in this digital world are copywriting, SEO, simple graphic design, and consistency. Learn them, obtained them, use them, and repeat!
4. You can make income from any passion, learn how to
This further proves point #3. But if you take anything from this article, just know that there are no limits for entrepreneurship at this point. People are making money from YouTube, social media, and blogs so the time to benefit is now. All you need today is a platform and you can profit. Find your passion and start growing your platform this year!
5. Rich people think long term
I really doubt there’s any way to consistently profit from any business that is built ridiculously quick. Trust me, I’m still looking for it! I have to remind myself this time to time, but any great product will take time to build. So, find your passion, come up with a creative way to make money from it and really get dedicated to making it happen.
Andrew Wood explains in further detail how really successful people think about how they can improve this decade rather than just this month. This mindset will give you time to build a really great product, especially when you give it the time it needs to be perfect.
6. Find an area to become an expert in
With more and more businesses needing the skills that the younger generation already has, the potential to profit is really endless. Website design, copywriting/proofreading, becoming a virtual assistant, social media manager… these are just a few ways that freelancers are making money today.
Pick one that you like and don’t mind spending hours to perfect. Get really good at this skill. Dedicate your entire 2020 to learning and exploring this one skill and see your progress. (This year I’m working on exploring my blogging skills, I’ll let you know how it goes come December ’20)
7. Even some millionaires don’t ever have financial freedom And it’s because they don’t have the discipline
When I learned that there are whole millionaires going broke, I lost hope in financial freedom for a second. (If I had a million dollars you will see hell freeze over before you see me struggle again… but I’m sure they were thinking that too!) That goes to show you that creating and maintaining wealth is more than just ‘making more money’.
I also learned that there are some people making six figures yearly but have somehow generated millions in wealth! THAT goes to show you that you don’t need to make millions to make it happen. There is way more to generating wealth than just these tips, but having discipline is a biggie. Once you have the discipline to live your wage, (allowing you to spend, save, borrow, invest, and donate appropriately), optimizing your money to make it work for YOU will get a lot easier!
8. Debt has to go ASAP. Here’s how to do it:
So remember, we’re talking about wealth here. Again, wealth is the value of your total assets (Home, car, jewelry) minus your liabilities (mortgage, car note, credit cards). Your assets increase your wealth. Liabilities decrease it.
If you didn’t catch my short story on Instagram about credit cards and the finesse of the minimum payment…you should check it out (@moneystateuniversity). Also, learn more about credit cards in general by clicking here!
But basically, your entire minimum payment doesn’t even go toward paying off your balance. A good amount if not most of it actually goes toward the INTEREST you owe from your balance. So only paying the minimum payment will result in you losing –A LOT– of money in the process.
9. Understand the time value of money
So remember in Sponge-bob when Mr. Crabs was trying to keep the money in his mattress? Yea well, I bet he didn’t understand the time value of money! Let me explain. So, the time value of money is this simple idea that a dollar today will always be worth more today than at any time in the future. What does this mean?
Imagine this: you just won the lottery and have the option to take $10,000 now or $10,000 in 3 years. What do you choose?
The best option would be to choose the money NOW. This is because if you had the money now you can at least loan it to someone and receive interest from that loan. OR you could also invest the money into a business that may make you way more money. Both of these options could increase the value of the money. You could even spend the $10,000 now rather than in 3 years (when the value has depreciated). You can’t buy as much in 3 years, as you would be able to today. This is why it is always better to accept money now rather than later.
I think this is really important when it comes to trying to understand the opportunity cost when it comes to money. If you can make more money from investing your spare savings, then it can definitely help generate wealth.
10. Creating profit from something scalable is key
When you trade time for money you’re limiting the amount of money you can make. IF it takes 4 hours to make a single product, then you can only make a maximum of 6 products a day… if you don’t take any breaks, like ever. No matter how expensive you make that product there is a limit to the amount that you CAN make. This means that you can’t scale it. Scale?
Yes, scale. If your business is scalable it basically means that you are able to expand your business no matter the increase in demand (Very important to remember when trying to begin generating wealth). In order to do so, the amount of work it takes to make the product should not be directly related to your payoff.
A good and scalable product would be something like creating an online course. You spend however long to make the course, but after that, your work is done and other people can buy it without you having to put in any extra work. This means that you can sell to 10 people or 100,000 people and still have to do the same amount of work.
This Year We’re Focusing on Generating Wealth!!
To conclude, you should really get Amazon Unlimited…ALSO, there are ways to begin generating wealth that don’t require you to start with making millions. This is the season of making it happen and I know we can, but we need to start right! If these tips helped or informed you in any way leave a comment and let me know how!
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