You read that right! Today we are going to learn how to stay poor or at least become poor. However, if you understand how most people stay poor, then all you have to do is go the other way around and join the 1% of people who are successful in getting rich.
So what do you have to do to stay poor or become poor?
Multiply liabilities instead of assets.
A liability is a purchase that is not going to make you money. It has the opposite effect, it will make you lose money in the future. For example, a car is a liability. When you buy a new car, its resale price decreases over time. It wears out, it loses miles, and maintenance and insurance are not free. Of course, if you choose a classic car, then its price will only go up and when you decide to sell it, chances are you’ll get more for it. At that point, it’s called an “investment”.
Here is a list of assets, which can make you money over time:
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Rental income (real estate);
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A business on the Internet (automated or not);
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The royalties you receive from each sale of books or CDs;
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Stock dividends from the stock market.
To summarize, the more liabilities you accumulate, the poorer you become, because your money is “consumed” by these liabilities.
Tip #1: Identify the liabilities you own. That is, all the objects you own that lose value over time or even worse that cost you money (latest model 4k TV, trendy sports car, etc.). If their usefulness is close to zero, then sell them.
Do not track or manage your bank accounts.
Here we apply the ostrich technique. If you don’t see something, it doesn’t exist. Not seeing problems is the best way to keep them. This is exactly the same with money management. Not caring will keep you poor and make your money management problems worse.
To get out of this vicious circle, we advise you to take your last 2 to 3 bank statements. You will then highlight all your useless expenses that you don’t need anymore… This often takes the form of subscriptions. (gyms, video subscriptions, etc.)
So the key is to see all the expenses for the month, which come in automatically and remove the ones that are unnecessary. Ask yourself if each expense is really useful/critical?
Tip #2: Download financial management apps that give you an overview of all your accounts. I can recommend Bankin or Linxo. If you don’t trust these applications, you can make an Excel file, some models are complete and available for free on the Internet.
Knowing where your money goes allows you to have control over your account. If you control the flow of your money, then you have taken the first step towards financial enrichment.
The next two points will probably seem blurry or out of reach. I assure you, this is not the case at all. On the other hand, adapting the wrong behavior will not allow you to develop your wealth and increase your financial capitalization.
Ignore the 3 pillars of wealth and stay poor.
99% of the population ignores these 3 pillars. Now that you have learned how to manage your financial accounts, you can start investing. You have reduced or eliminated your liabilities, you need to multiply your assets. There are many assets, but here are the 3 most “powerful” assets:
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The stock market ;
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Real estate;
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Entrepreneurship.
You can invest in the stock market by buying shares in order to receive dividends every month. These dividends will increase your wealth and eventually, you may be able to live off of them.
Investing in real estate will allow you to receive the rents that your tenants pay you. You may be a tenant now. Your rent is used to support your landlord, why not do the same?
Entrepreneurship is the act of starting your own business or even taking over an existing business. It is not necessary to have the idea of the century, there are nowadays many ways to create a business without raising funds of a million euros.
Tip #3: Don’t focus on all the pillars at once. Identify the one that attracts you the most and that arouses a real interest in you. You will have the time and the opportunity in the future to focus on the other pillars when the time comes.
Do not develop your financial intelligence.
This could also be summarized as “investing in yourself”. Learning how to manage your money, how to earn money intelligently, how to make it grow is not something you learn overnight. The information to achieve financial success is hard to find and you will need to learn now, but also when you have reached your goals, because the game changes often.
Tip #4: Read as many books, watch as many videos, take as many courses as you can in the field you are interested in investing in.
If you think education is expensive, try ignorance” by Robert Orben.
Feed your limiting beliefs to a poor mind.
Limiting beliefs are any phrases that can prevent us from taking action. “My family has always been poor, so I can’t get rich”, “you have to be born rich to understand how money works”, “you have to scam people to make money”.
All these beliefs will prevent you from trying, from taking action. These beliefs are false. Many people have become rich from nothing. Many people have become rich by doing good around them. A horrible person, whether rich or poor, will remain horrible. But a good person, whether rich or poor, will work for good. The only difference is that with money, they can help more people, faster.
Tip #5: Surround yourself with people who have the same goals as you, share and get to know people who have accomplished the goals you have. This will change your perception of things as well as your actions and results.
What paths do you choose for the future?