6 Foolproof Ways to Generate Wealth — Mindset Theory
One of the most important things you can do to ensure your financial health and future wealth is to learn how to generate wealth in your life. You’ve likely heard people say, Money makes money, and if you make smart investments, that saying will ring true. Here are some foolproof ways to generate wealth that you can start using today!
1) Save Money by Changing your Lifestyle -
The first step towards generating wealth is saving your hard-earned money. To create a solid financial base, you have to have a good understanding of your personal finances. The good news is that tracking expenses can be fun, if you do it right. Once you know where all your money goes each month, it becomes easier to make sound investment decisions-because when it comes down to it, all investing is based on savings and spending decisions. So, start small by making a list of things you can change in your daily life. For example, instead of buying coffee every day at $5 per cup, invest in an espresso machine for $200 that will save you over $1,000 per year! This is how smart investors roll: they look for ways to save money by changing their lifestyle or eliminating unnecessary costs from their budget. If you can’t see how something fits into your long-term plan, then don’t buy it! As simple as that sounds, most people don’t follow through with it because they tend to think short term rather than long term.
2) Diversify Your Income -
If you have a job, but also other sources of income (like rental properties or a freelance business), you’re able to greatly reduce your risk and protect yourself from an unexpected downturn in your main income. In fact, according to author Robert Kiyosaki, many millionaires put 20% of their assets into passive investments that will generate a consistent cash flow while they build their businesses. You might want to do something similar with some of your savings. It couldn’t hurt, right? Think about it: If you lost your job tomorrow, what would you do? If that means saving up money for six months before you could start freelancing full-time again, would that be worth it? How quickly can you save enough to sustain yourself if you were unemployed for a year? These are just some of the things you should think about before quitting your day job. This is especially important as our economy becomes increasingly unstable. That doesn’t mean there aren’t people who make it through without any safety net; there certainly are those out there who achieve financial success without ever relying on others to support them financially-but they are few and far between.
3) Contribute to Your 401k if You Have a Job -
If you have a job with an employer that offers a 401k, contribute enough of your paycheck to get as close as possible to matching what your employer contributes. If you can’t do that (because of taxes or other reasons), take advantage of any other tax-advantaged accounts you may have available, such as IRAs and Roth IRAs. These are especially good for long-term wealth building because their tax advantages grow along with your money invested over time. There are no limits on how much you can put in certain IRAs; in 2018, there’s up to $5,500 in annual contributions for most workers who participate in retirement plans at work ($6,000 if you’re 50 or older). Contributions to a Roth IRA aren’t deductible, but withdrawals are tax free after age 591⁄2 and provided you’ve had one for five years. In addition, unlike traditional IRAs and 401ks, there is no required minimum distribution from a Roth IRA when you turn 701⁄2. The longer your money has to grow inside these accounts without being touched by Uncle Sam, the better off you’ll be down the road.
4) Avoid Debt -
Debt is one of those loaded words that often has people thinking of excessive debt, mortgage and personal finance crises. But there are good debts and bad debts — meaning consumer debt and investment debt. Good debts can come in handy when you need money for a big purchase or an emergency, like a car repair or a trip home because of an emergency. These are generally short-term loans that get paid off quickly. Bad debts are consumer purchases (like buying extra clothes) that aren’t necessary at all; these tend to carry interest rates higher than 5% so it costs more to pay them off than you gained from them in value. To generate wealth, avoid debt as much as possible. The stock market provides great returns over time, but even long-term investors should still be wary of debt if they want to see their investments grow over time. If you’re trying to start a business, make sure you have enough savings on hand before making any large purchases. That way, if your venture doesn’t pan out, you won’t have to take out any loans or put yourself into financial ruin.
5) Maximize Work Benefits (401k, FSA, HSA, Stock Options, etc.) -
Are you already maxing out your work benefits? If not, there’s a good chance you could be putting thousands of dollars back into your pocket every year. The easiest way to take advantage of your employer-provided benefits is simply to talk with HR about maximizing them. For example, if you have a 401k plan at work and are only contributing 3% of your salary per month (which amounts to $24 per week), it might be worth talking with HR about increasing that amount. It may seem like a small change, but over time those contributions can really add up. For example, upping your monthly contribution by just 1% ($1 more per week) will net an extra $2,000 in savings over five years-and that’s without factoring in any potential returns on investment! You can also consider making changes to other types of plans offered through your company like FSA or HSA accounts. These are two other areas where many people don’t realize they’re leaving money on the table. With an FSA account, for example, you can typically contribute anywhere from $500-$5,000 each year depending on your job. But while most people know they can use their FSA funds to pay for medical expenses, few are aware that these funds can also be used to pay for almost anything else related to health care, including dental bills and prescription drugs.
6) Invest in Yourself by Taking Courses That Will Make You Money Later -
Investing in yourself isn’t just about your career. You’re also investing in your wealth. Whether you want to start a business or simply improve your existing income stream, there are many affordable, quality courses available online that can equip you with invaluable skills-skills that you can use for years to come. Investing in yourself may not be as financially lucrative as investing in stocks, but it offers other rewards: empowerment and control over your own life. Plus, what do you have to lose? If you invest in yourself and learn nothing, at least you won’t have lost any money. And if you learn something new that helps you generate more income later on down the road, then it was well worth your time!
Thank you for reading! Stay tuned for more content!
If you want to build an online business and make money online, check out Mindset Theory Exclusives where we post new content every week!
Asset Academy — The e-learning subscription platform for online entrepreneurs where you gain unlimited access to guides and Audiobooks that teach you the strategies people use to build million+ dollar online businesses!
Asset Archives — Purchase your in-depth PDF guides for affordable prices and take notes, highlight, or print to keep as your study guide!
Originally published at https://www.mindsettheoryofficial.com on May 25, 2023.