Shilpa Karhik4 vital steps in achieving financial security:
May 13th 2007 11:41
1) Pay yourself first - This is a must for self-employed individuals, for owners of small businesses, and for anyone not covered by a company retirement plan. There are many financial temptations that face you every time you receive your salary / pay cheque. But if you don't take some out for yourself and put it into some form of investment vehicle, with planning for later life in mind, no one else will do it for you. The principle of Pay Yourself First is explained in the financial classic, "The Richest Man in Babylon," by George C. Clason.
2) Increase your assets, reduce your liabilities - Asset means: something that will put money in your pocket over time. Liability means: something that will cost you money over time. When you have money burning a hole in your pocket it's all to easy to buy things you think you need: New Car, Expensive Stereo Equipment etc. For example: You buy a luxury car for £30,000 over a period of 10 - 15 years chances are it will be worth a very small percentage of what you paid for it. However if you bought a £15,000 car & invested the other £15,000 wisely, your investment over 10 years could easily be worth £30,000 & possibly much more, which in theory means your initial outlay of £15,000 for your car has been recouped. Free car! You work hard for your money, make sure your money works hard for you. This principle and others vital to wealth are discussed at length in the best-selling book, "Rich Dad Poor Dad," by Robert T. Kiyosaki, with Sharon L. Lechter, C.P.A.
3) Invest first, buy luxuries when once you've achieved wealth - The best-selling book, "The Millionaire Next Door," by Thomas J. Stanley, Ph.D., and William D. Danko, Ph.D., conclusively shows that most millionaires are quite conservative in what they buy. This habit is what enables them to become wealthy in the first place, but even after they have achieved financial security they tend to appreciate the value of saving and buying assets, rather than purchasing luxuries. The book's research discovered that many people who buy expensive watches, clothing, cars and homes are, in fact, not yet wealthy. Rather, they want to appear wealthy. By spending money on items that do not produce income (liabilities), wealth remains elusive for most of these individuals.
4) Financial knowledge is your key to wealth - Most schools teach skill-based information, not investment or overall financial know-how. Today's economy demands a constant upgrading of skills, and a general overall knowledge of investing. Remember financial intelligence is the mental process via which we solve our financial problems. This principle is also explained in "Rich Dad Poor Dad," by Robert T. Kiyosaki, with Sharon L. Lechter, C.P.A.
2) Increase your assets, reduce your liabilities - Asset means: something that will put money in your pocket over time. Liability means: something that will cost you money over time. When you have money burning a hole in your pocket it's all to easy to buy things you think you need: New Car, Expensive Stereo Equipment etc. For example: You buy a luxury car for £30,000 over a period of 10 - 15 years chances are it will be worth a very small percentage of what you paid for it. However if you bought a £15,000 car & invested the other £15,000 wisely, your investment over 10 years could easily be worth £30,000 & possibly much more, which in theory means your initial outlay of £15,000 for your car has been recouped. Free car! You work hard for your money, make sure your money works hard for you. This principle and others vital to wealth are discussed at length in the best-selling book, "Rich Dad Poor Dad," by Robert T. Kiyosaki, with Sharon L. Lechter, C.P.A.
3) Invest first, buy luxuries when once you've achieved wealth - The best-selling book, "The Millionaire Next Door," by Thomas J. Stanley, Ph.D., and William D. Danko, Ph.D., conclusively shows that most millionaires are quite conservative in what they buy. This habit is what enables them to become wealthy in the first place, but even after they have achieved financial security they tend to appreciate the value of saving and buying assets, rather than purchasing luxuries. The book's research discovered that many people who buy expensive watches, clothing, cars and homes are, in fact, not yet wealthy. Rather, they want to appear wealthy. By spending money on items that do not produce income (liabilities), wealth remains elusive for most of these individuals.
4) Financial knowledge is your key to wealth - Most schools teach skill-based information, not investment or overall financial know-how. Today's economy demands a constant upgrading of skills, and a general overall knowledge of investing. Remember financial intelligence is the mental process via which we solve our financial problems. This principle is also explained in "Rich Dad Poor Dad," by Robert T. Kiyosaki, with Sharon L. Lechter, C.P.A.
| 30 |
| Vote |
Subscribe to this blog
