Change Your Outlook With The Proper Money Mindset

Change Your Outlook With The Proper Money Mindset

If you look at the profiles of wealthy people, you will find they have a different mindset than others. They know the value of money, and they know the fundamental factors of how to make their money grow. If you are not yet wealthy and feel you are struggling, take some tips from these wealthy people.

An age-old idiom of money is to use compound interest in your favor. Benjamin Franklin was a big proponent of this principle. He was quite wealthy for his time, so it is likely he knew what he was talking about.

But, it makes sense. If your money grows on its own, and the money that you earn ends up growing as well, it’s only a matter of time when this amounts to a decent sum of money. And if you keep adding to the balance, that money will also grow along with it.

The situation is a bit more complicated today with government taxing the growth of money. But, you can invest in an IRA or 401K and have that tax deferred until some future period. Speaking of taxes, make sure you work with a qualified accountant and a financial planner to ensure you are paying the least amount of taxes possible. Wealthy people do this.

Another principle wealthy people adhere to is creating multiple income streams. The more income streams you have working for you, the quicker you will become wealthy. When you have multiple income streams, pump up the ones that are working well and dump the ones that aren’t.

After you are financially well off, make sure you never touch the principal. Set up your principal so that it earns the most it can earn and live only within the means of the earnings on that money.

If possible, add to the principal with as much of the earnings as you can afford, so that the principal grows. Just never tap into it. If you find any shortfalls, consider taking on some temporary work. Once the principal is gone, it’s gone for good.

The final tip is to stay out of debt as much as possible. The debt will drain your savings and your portfolio. There can be smart uses of debt as long as the result of using that debt brings in more money than the debt itself. But, most debt should be avoided to keep your financial outlook stable.

Why Aren’t More Schools Teaching About Money?

It’s one of the most fundamental skills for people to have, i.e., learning about proper money management. If kids don’t learn it early on, how are they expected to take on a money mindset later in life? When they set out on their own, this is when it will be needed most.

Our society doesn’t do a good job on teaching kids about money. But, when they get to college, we wonder why they get into trouble with credit card debt. First, why are these credit card companies even offering college kids credit cards in the first place?

The truth is, they know kids will run up a huge balance and not be able to pay. Parents don’t want to see their kids start out with negative credit, so they end up paying for the kids.

There is a responsibility for parents to teach their kids about money. But, if some parents are not good at money management, how will they be able to teach that to their kids? If the parents are running up high debt, how will that set an example?

Kids also need to learn the proper techniques of portfolio management and how the stock market works as well as other financial vehicles available. This foundation could help the kids make better investing decisions at a time when it is needed.

Too many people are under the false belief that young people first starting out can take on more risk. Bear in mind, these same young people make much less money when they first start out. So, taking on those higher risks means it will take much longer for them to recover financially.

Another problem is both teachers and parents are not trained on how to teach about money. It’s a much more complicated subject than it appears on the surface.

While teachers could teach the basics of budgeting and why it’s important to stay out of debt, they don’t have the resources to teach them about proper investing or what to do when someone gets in financial hot water, i.e., large consumer debt, etc.

When kids get to college, they often don’t have a clue about money management. This could be a large reason why subjects like their countries’ national debt are low on the priority scale. If they are informed, they may not be as willing to accept the government spending in the manner that it does.

If these college kids get into politics themselves, their training could help them in reducing this debt and keep a fiscal order with policies.

Why Don’t More People Have A Budget?

A budget is a great way to get and keep people on track with their finances. It lets you see what money is coming in and what is going out. Obviously, you want the inflows to be greater than the outflows and the bigger the spread, the better.

One big reason people don’t budget is that they want instant gratification. We see something on television that is cool, some new electronic gadget, etc., and we want one. Kids see the newest toy and it is immediately on their radar.

Credit cards make it easy to buy and defer payment. So when the urge to buy is strong, people justify that they have time to pay it off later. However, do this enough and you’ll find your balances on the credit cards to be much greater than you can manage.

There are people who make budgets but then cheat on them. They end up using all kinds of excuses as to why they spent above what the budget allowed. This is a big reason why people fail with budgets. After they cheat once, it becomes easier to do so in the future.

The key to staying on track with a budget is to focus on why you have a budget in the first place. When you do that, you can say to yourself anytime you get the impulse to buy that it will ruin that future goal. Once people start to see their balances grow due to budgeting, it helps to reinforce and motivate people to stay on track.

If you create a budget and find that the outflows are greater than the inflows, you will need to cut back on expenses or increase your income somehow, or a combination of both. Increasing income has become a bit easier with the internet.

You could post your skills online and pick up some freelance work in this way. This is something the entire family could get involved with. Over time, if you stick to your budget you should see the benefits. These will more than make up for the effort required at the beginning of the process.

Many people find they prefer working in this sharing internet economy and choose to do it full time. As long as it brings in the necessary cash to stay within the parameters of your budget, you could choose to do this yourself. Just make sure you factor in everything that you are giving up working for someone else.

Whatever you want in life will require discipline to achieve and being good with money and becoming successful is a small part of this. And if you want to know more about harnessing the power of self-discipline, then check out the featured resource below for a free report; download, read it and take action 🙂

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