While the estimated number of wealthy people
continues to increase steadily, a lot of ordinary folks are being left behind. If you are one of
these people, it probably means that you are not doing something right. But hopefully, I’ll
change that today. By the end of this video, you will know about all the best channels which
you can use to build wealth. So stay tuned! Number 1: Educate yourself first If we ever want to change our financial status,
you must begin with our mindset. You can start adjusting your mindset by becoming acquainted
with the basics of financing. It’s crazy that some people are employed but are still clueless
about some basic concepts like how to file their taxes. While some people choose ignore this or
think they can just get someone to do it for them, this is the wrong approach. Familiarizing
yourself or at the very least, knowing how to file your own taxes, is a good idea. Also,
acquaint yourself with these basic terms; income, expenses, net worth, return on investment,
passive income, financial independence, and so on.
In addition, read all the books you can find
which are related to finance. If reading is not your thing, you can listen to podcasts or anything
that’ll make you financially aware. The point is to never stop learning. While in the process, you
should also be cautious because the internet has all kinds of information; while some are true,
others are misleading. If you want to find out the best information, a good bet is to check
out all the successful investors. Follow their social media pages, and blogs, because they should
have some pretty insightful things to tell you. Number 2: Get a regular income source first If you want to become wealthy one
day, and you don’t come from money, then friend, you better have a plan. The
thing is, you can’t just wake up and decide that you want to start accumulating your
First, you’ll need a game plan, which should factor in your source of income,
whether that will be a regular job or a hustle. Once you have saved up enough, you should then
start researching way’s in which you can grow what you have saved into something substantial.
This might mean, investing in the stock market, starting a business, or getting education
and certification for a high-income skill. Whichever one you choose, make
sure you are also mentally, prepared for it potentially, not working
out, and having to start all over again. But before I move to the next point, if you
are enjoying the content so far, be sure to give this video a thumbs up for that YouTube
algorithm, and subscribe if you are new here. Number 3: Make a budget and stick to it. For some reason, some people think that it’s
unpopular to have a budget.
That having a budget, and setting a limit on your spending
is being too strict on yourself. However, what they fail to see is that
budgeting has a plethora of benefits. First, you’ll become disciplined and stop yourself
from overspending on things that aren’t a priority. This can certainly help you to
build your savings and eventually your wealth. Personally, I use the 50/30/20 rule, which
is quite simple yet very effective. 50% of my earnings goes to essentials like rent, food, or
health care. 30% goes to my needs like shopping or entertainment, and 20% goes to my savings. By
planning your income this way, you’ll find your wealth growing steadily each month.
In fact, it’ll
seem quite effortless. The main point of budgeting is to reduce your spending and maximize your
savings. It’s pretty much like trading one thing for the other, with the only difference being
that saving is way more beneficial than spending. If you want to find out more, I made a
guide which talks about all this and more, which you can get for free using
the link in the description. Number 4: Build an emergency fund. Imagine this scenario, you have an early 2000
Toyota Corolla, which for several years has served you well.
However, it’s getting old
now, and it’s starting to develop a couple problems now. It’s your only car and you rely on
it a lot for work and commuting. If anything bad were to happen to it, you wouldn't know where
the money would come from to replace it. But one day the worst does happen, and your car
breaks down. The repair bill is enormous and you aren't sure where the money is going to
come from. Your only choices are, selling an investment to pay for the repair, or go into debt
which you will have to pay a high interest on.
I’m guessing you’re probably frowning right
now because these are not the best option in the world. If you want to avoid such stressful
decisions, you’ll have to build yourself an emergency fund. Life can be very unpredictable.
For example, in the car example I just talked out, if your car broke down in the middle of nowhere
and you’ve got no insurance? Here is where the emergency fund would have come in and saved the
day. This is just a fund you ought to keep that will help you in times of unplanned situations
that require urgent funding. Although some wise investors have already taken that step and now
have an emergency fund, they sometimes forget that a good emergency fund should be able to take
you through 6 to 12 months of living expenses.
The need for such a fund was made clear for a
lot of people during the recent pandemic when many lost their jobs and had no form of income.
Once you’ve started building your emergency fund, you can just put it in your savings account where
it’ll be easier to access if the need arises. Number 5: Invest money. Now that you’ve built yourself an emergency
fund, it’s safe for you to start investing so that your money can start growing.
There are a variety of options where you can choose to invest your money, but first,
you’ll have to do your homework because you wouldn’t want to invest in something
you’ll not be able to keep up with. You can begin by invest in stocks by
buying them on the stock exchange. And if you didn’t know, qwning stock is
almost like having a piece of the company, and you’ll profit from the slightest
rise in the price of shares as well as dividends that’ll be paid out.
they are, at times, riskier than bonds, their risks vary depending on the corporation.
If you’re not comfortable with stocks, you can choose bonds. These act like IOUs (
which is an informal document acknowledging debt) from a company or government. Technically,
if you buy bonds, the issuer always gives you their word to give back the money with
a profit on top after a certain period. You’ll also have to do proper research
on the types of bonds you’re taking to avoid any surprises; get to know
the bond rating agencies assigned. Alternatively, you could go for mutual funds. This
simply means you buy a pool of securities. Most of the time, it includes stocks, bonds, or a mixture
of both. Although mutual funds are quite risky, they also bear very good rewards in the end.
What you’ll need to be aware of as a young investor is that all three work well but are still
risky. All it takes is the right time to invest. Number 6: Automate your financial life.
Most of us are familiar with how stressful
handling money can be. From the bills and debts to savings and investments, it
sometimes feels like it’s too much. At times, we tend to spend the money we weren’t supposed to
or end up forgetting to pay certain bills because we are too busy. Luckily for you, there are a
couple of ways to get this done automatically. Many financial advisers would suggest that you
have a fixed percentage that is deducted from your salary each month to cover your debts, savings,
and investments. If you activate this feature, there’s no payday that will go by without you
distributing it equally. The more you do this, the more you’ll get used to it and eventually, you
won’t even notice the money you’ve saved from your salary.
(Pretty genius, don’t you think?) It’s
a perfect example of working smart and not hard. Number 7: Increase your retirement savings. Steadily saving money is an amazing way
to compound your wealth into fortunes. This is often very evident to most
individuals who save up for retirement. Some very common ways to do so are by
using the 401(k) plan or the IRA. The 401(k) account is one that is given by the
employer to help save the employee's salary for retirement. Most of the time, the money is
put into good use through bonds, mutual funds, stocks, guaranteed investment contracts,
target-date funds, or your employer’s stock. With this plan in play, you can contribute
a percentage of your salary that will be used as an investment, which is later put into
your retirement fund. The best thing about the 401(k) plan is that you can choose when to
be taxed, whether at the beginning or after you withdraw when retired. The other one is the
Roth IRA, which is a tax-advantaged retirement account to which you can contribute money with
The reason I’d recommend that you go for the Roth IRA is that the money won’t
be taxed when you withdraw it in retirement. The only requirement is that you have to be at
least 59 years of age. Also keep in mind that, withdrawal of the retirement amount before
the retirement age always carries a penalty. Number 8: Stay diversified. Ever heard the proverb, “never put
all your eggs in one basket”? You see, this simple proverb has a much deeper
meaning to it. From a business perspective, it simply means that you shouldn’t
invest all your money in one place. I know some people may say that you’ll have
more if you invest all your money in one place, but these types of people haven’t really
thought about your financial security. It’s not a surprise that some businesses
fail or that the market falls drastically, but it’ll be a shock if that happens and you’ve
put all your money on the losing end.
The best way to stay safe is by putting your money
in different investment sectors so that, in case of a loss, you’ll still
have something to keep you going. Number 9: Explore passive income ideas If you really want to build your wealth, then you
need to think more about how you’ll build it even further. It’s okay if you’ve got a job that pays
you well, but if you’re being true to yourself, you should ask yourself, is that all you need?
I already know the answer to that, so do this.
Find yourself a job that will make you some
money even as you sleep, something that doesn’t require your full attention. There are
plenty of options currently, like blog posting, marketing, selling digital products and drop
shipping. The best and most profitable way to earn a passive income is by investing in real
estate. Although it sounds like easy money, passive income jobs also require some serious
attention and some need very large amounts of capital, especially at the start.
If you find
yourself a way to earn some passive income, I bet you’ll be better off than the
few who depend on their full-time job. Number 10: Use Robo adviser Managing businesses can sometimes be challenging,
especially for those who lack all the knowledge. Luckily, for everyone's sake, nobody should
struggle with their bond ETFs or IRAs because now there are specialists for that. The Robo adviser
simply gathers information for their clients through online surveys and makes the necessary
investments on their behalf. Despite the fact that many people don’t trust these guys, they
usually make the correct investment decisions. Once you have mastered all these, you can proceed
and consider the channels rich people follow to grow their wealth. It makes no difference if you
have a nice job that pays well. Aim for more! If you found this video interesting,
you might really like this one, which talks about way’s in
which you can double your money. With that being said, thank
you all so much for watching, and if you found this video helpful, be
sure to give it a thumbs up and subscribe to our channel for more tips on
how to improve your finances.
Until next time, take care!.