From the top financial advisor I follow.
No matter how much money you earn now, there will always be people who will feel that you make a lot and others who think you don’t have enough to even cover your bills.
To put you in context, on the island where I live right now, the minimum wage is $200 (yes, dollars). With $600, you can live comfortably, and with $1200, you are practically rich. However, there are still people earning $2000 who can’t save money, and others doing pretty well with $700.
Over the past five years, I have read more than 100 financial articles and around 15 money books that have taught me how to manage my money, and today I will show you how to make the money you earn more abundant, whatever quantity you are earning now, based on all the financial advisors I follow.
“What you focus on expands.” — T. Harv. Eker
In 2020 I only had one source of income. With the pandemic and the insecurity of the jobs, I decided to start making money in different ways to at least have something if something happens to my daily job.
The result was $300 in passive income from index funds with the money I currently had, $800 monthly writing, and $700 on a small business.
When people don’t make much money, they usually focus on complaining and continue to spend their entire salary. They focus solely on what they can accomplish with what they have.
However, if they focus on what they can do to make more, they can even double their current earnings.
With the money that I already had saved, I learned about investment funds that made me have more money each month, and with the time I had leftover, I was able to do other businesses.
Focus on growth, and you will grow, but focus on “how to pay your bills with what you have,” and you will be limited to that.
Darius Foroux, a financial writer, explains how he is able to grow financially: by focusing on big-money decisions. Basically, if you do a mediocre job, you will get paid for that. But if you think big and work for that, you will receive big results:
“The key is to adopt a way of life that helps you to get richer in the long term. Think about the big decisions you’re making. A very obvious example is leasing cars. You’re paying a huge premium today to drive that car. You could use that premium to do a million other good things.
When you focus on these types of big decisions, you will make life easier for yourself. Think about your future self. You want to make sure you’re better off in a year than now.”
Most of the financial problems of probably 90% of the population have been from trusting their financial stability in a bank.
However, banks are like any other business: Their profits come from how well they sell a product to a customer.
For that reason, to earn more (or at least protect what you currently have), you need to understand well how banks work. When you know how they make money (which is basically like any market, taking money from people who don’t know how to manage it to give it to those who do know how), you will be one of the ones that make money with them.
Money is losing its value with each passing minute. So the best thing to do when you get your payment is to move it to the right place.
Always move your money to your important payments and investments since you receive it. This way, you won’t give your brain time to think about buying things you don’t need.
Another tip that helps manage your money is to put a name to each dollar that you are going to get: for example, every time I earn $10 from a business, I say this money will be to invest in the index fund or this will be to pay the maintenance of the car.
When your brain knows what you will spend the money on, it doesn’t have time to process stupid purchases.
The best investment you can make with your money in the short term is to keep it in liquid cash in an account that is difficult to access.
There is no short-term investment with a good and safe return. Thinking about your money in the short term is just a waste of time and probably a waste of money if you do it wrong.
In the long term, any market can be your friend. Real estate, stocks, Cryptocurrencies, etc., all of them have given good results in the long run. If you understand how they work and their risks, you will be fine eventually.
Another problem that many people have when they start earning money is believing that they can afford anything.
They start going out, having ten subscriptions, apply for a credit card and a car loan, and live according to what their salary and loans let them. If they start earning more, then they adjust those expenses.
However, this is not the reality of the salary they actually earn.
Something that helps me determine how much I can really spend is the 50/20/30 rule. If I can at least save 20% of my salary, and pay all my bills with 50%, then I know I can afford that lifestyle. If this is not the case, then I have to cut some expenses.
If you already have a lifestyle marked by a salary and start to earn more, the smartest thing you can do is continue your life as it is and start saving and investing what is left over. This will help you climb faster in your financial goals.
No matter how safe an investment, company, or cryptocurrency looks, any investment can go to 0. Keeping that in mind will help you make better decisions with your money.
One of the things that helped me understand this concept is seeing that everything I buy in hype has lost at least 90% of its value.
Nothing is 100% guaranteed, and nothing is 100% safe. Divide your money according to this rule.
If you have never invested before, the best way to start is with index funds. Once you’re comfortable with the amount of money you have on there, you can start exploring other options.
However, an index fund is enough, and you don’t have to invent anything else if your plan is simply to live a comfortable life based on your salary and business.
Jari Roomer, in his article “This Study of 10,000 Millionaires Shows You The Truth About Building Wealth,” explained how most millionaires are self-made and more than earning a lot of money, they just have learned how to invest what they currently have:
The National Study of Millionaires shows the average millionaire makes less than you might expect:
– 33% of millionaires never made more than $100k/year at any point in their career
– 31% of millionaires made around $100k/year over the course of their career
– Only 15% of millionaires were in senior leadership roles (CEO, CFO, etc.)
-75% of millionaires said that consistent investing over a long period of time is the main reason for their financial success
Focus on how much you can earn and save with what you currently have, and you will be wealthy eventually, no matter how much money you have now.
Rocco Pendola explained how many people worry about money because they think they need to earn millions of dollars to afford certain lifestyles.
However, most of the time, the problem is the life they want to achieve is often unrealistic expectations and waste.
As I said at the beginning of the article, in my country, you can live comfortably with $600. The problem is when people start trying to have a $2000 life because this is their dream.
Leave consumerism and try to live a real life for a month, and you will realize that most of your payments are unnecessary.
Many people worry about money because they believe that it is what will solve all their problems. However, looking at it from a realistic perspective, most of them don’t really need it.
In the book “how to worry less about money” by John Armstrong, I learned that only immediate needs and emergencies should make us worry about money; the rest is just part of a consumerism mindset that doesn’t really let us realize what we need.
If you want to make your money more abundant, no matter how much money you earn now, here are the ten tips summarized:
- If you think you don’t earn enough, find ways to earn more with what you currently have.
- The simple mental model to change your financial life is to focus on big money decisions.
- Banks are not trying to help you. Find out how they make money and don’t do those things.
- Currencies lose value over time. You should spend it on goods or assets as soon as possible.
- In the short term, cash will always be king; in the long term, assets will always rule.
- Live according to the salary you earn, and don’t adjust it until you earn at least double it.
- Every investment can go to 0.
- Buying index funds is one of the easiest ways to build wealth.
- What matters more than your salary is how much you save and invest.
- The amount of money you need to live is much less than you think.