Most people today spend more than they earn and also have credit card debt that is spinning out of control.
As an entrepreneur, it’s especially easy for expenses to spin out of control and cause instability in your personal life. No matter what kind of business you own, and how much money you already earn, its always important to go back to the basic principals of building long term wealth.
Many times, the process doesn’t even involve as many difficult sacrifices as people might think. It can require some patience and a little planning, but with these five tips any person can find themselves on the road to building a strong foundation of wealth.
1. Save More
This tip should come as no surprise. If you want to have more, then you have to save more. The goal should always be to save 20% of the money you make every month. For some people, this simply is not possible, so shooting for 10% (or even less and than scaling up each month until hitting 10%-20%) is acceptable.
Remember to be conservative both in your small and large purchase decisions. The old idiom to not be penny-wise and pound-foolish is very important for business owners. It’s an easy tendency to look for the hardest bargain on paperclips and office supplies while recklessly spending larger amounts of bigger expenses before they are even necessary.
Wait 30 days to make a large purchase and this will give you the best clarity in your decision making.
2. Invest Right Now
Saving money is a great first step, but no one becomes wealthy from putting their money into a savings account. As soon as you set money aside for the month, invest as much of it as you can.
The sooner you start earning returns on your money, the faster you will build wealth. Invest in a variety of different assets, and create a diversified portfolio.
Also, never spend your investment principal.
3. Pay Off That Credit Card Debt, Now
Credit card debt means lots of credit card interest. Many times that interest is as high as 21%. Avoid the damage this high interest is likely doing and start paying off your credit card debt as fast as possible, and keep your charges to a minimum.
It can really add up over time.
4. Track Your Expenses… And Take Time To Review Them
Write down every expense down to the penny. Do this every day, and at the end of the month take the time to review it. You may be surprised to see how much you are spending on things like eating out or shopping.
For some, these expenses can add up to more than their ‘big items’ like utilities or mortgage payments. Look at areas you can cut and think about places where you are spending money wastefully.
A few simple cuts here and there can really go a long way.
5. Set a Monthly Goal, and Stick To It
At the beginning of every month, you want to set what is known as a “wealth goal” for how much money you want to have in your savings and investment portfolio at the end of the month. Write it down somewhere where you will see it and look at this goal every day. Put in the work, hustle and do what it takes to meet that goal.
At the end of the month, you will love the feeling of satisfaction you have over meeting your goals and will find that you are quickly building up a great deal of wealth.
These tips are changes that any entrepreneur can easily make to their lifestyle to start multiplying their wealth and running a more profitable business. But they don’t work unless you do the work, so start implementing now!