7 Laws of Money to Build Wealth
These 7 laws separate the people who just get by financially from those able to accumulate considerable wealth.
RULE #1 PAY YOURSELF FIRST
Income - Savings = Expenses
This means that you pay yourself first before bills, groceries, etc. Because when you use this formula, you will be disciplined in saving for yourself.
Rule #2 Get only into a business you understand. Seek advice only from competent people.
Business Leaders must know where to seek advice
- You should be more selective about whom you turn to for crucial advice.
- Your friends are not always the best people to share your inner business confidences with.
- Be able to differentiate between substantive criticism and baseless attacks.
Rule #3 Make your Gold (Money) Work for you
Make an Army of Golden Slaves before you buy Luxury
Rule #4 Spend Less than you earn
- It means that you must know how to find a way to lower your expenses. You need to exercise discipline by reducing expenses and savings.
Expenses fall into two categories:
- Fixed (rent, utility bills, Subscriptions)
_ Variable (groceries, utilities, eating out)
Rule# 5 Invest ( make your money multiply)
Learn to multiply your money fast through investing and not just saving them.
Rule #6 Guard your Wealth against loss
2 Ways to protect your Wealth:
- Diversify
- Get insurance
Why should you not put all your money into one investment option?
If you put all your money in one investment and it goes down in value, then it can wipe out all
your hard-earned money and you may lose it all. Losing all your money can haunt you for
years and will make you rethink wanting to step into the world of investing again.
But if you placed your money in 5 different investments and one went down in value, then
you could still come out ahead and enjoy the gains of the other 4.
There are two types of Insurance:
a. Life-- human life is given protection
b. Non-life-- inherited properties the one given protection (car insurance, fire insurance, property
insurance, theft and robbery insurance, and travel insurance)
Rule #7 Save for Retirement and Live Simply
We save, Not because we want to have so much money when we're old. We save because we don't want to be a
financial burden to our loved ones when we retire and can no longer earn income.
The sooner people realize this, The better they can enjoy their retirement years.