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8 Rules To Build Wealth When You Weren’t Born Into Money

Use these eight rules to build wealth when you weren’t born into money. The harder you work at these rules the closer you’ll get to achieving the wealth you want.

Nicole Crampton

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Here are eight rules to build wealth when you aren’t born into money

99% of people aren’t born into wealth, and have to work their whole lives to achieve six-zero figure financial freedom.

“If something is important enough, even if the odds are against you, you should still do it,” says Elon Musk. The path to wealth, for numerous people, is complicated and filled with obstacles and is unique to their specific circumstances, But, their determination to reach their goals allows them to make the money they always wanted to make.

You’ll need to make smart decisions in your personal and professional life to build your wealth up over time. “Great wealth builders focus on both saving money and earning more,” says Todd Tresidder of FinancialMentor.com. It’s a twofold system that you’ll have to operate the best of your ability.

Rule 1: Pay off high-interest debt

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Escape debt

 

Your first step to achieving wealth is to settle outstanding debt. If you’re holding significant debt, you won’t be able to make new investments or buy assets. You’ll find yourself spending all your disposable income on paying off the interest and never really getting to the principle amount. This puts you in a circle of debt where you never make any progress.

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this,” says Dave Ramsey.

Once you’ve dedicated more money to servicing debt, and you’ve paid off high-interest accounts, you can progress to investments and saving larger portions of your salary. You can now use your excess debt instalments for your investments, and the interest you’re earning will now build on your wealth instead of taking away from it.

Rule 2: Always have money left at the end of your month

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Manage your monthly finances

This rule is an easy concept, but challenging to put into practice. If you want to grow your wealth, you’ll need to ensure your monthly expenses are less than your monthly income. “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for,” says Robert Kiyosaki.

The key to following this rule effectively is lowering your spending so you can increase your savings. You can start by slowly putting away a certain amount every month. Keep in mind you still need to pay your bills and live comfortably, which means the amount of money you put aside needs to be any extra cash you have left over.

Rule 3: Take advantage of tax-free savings accounts

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Tax free savings

With a tax-free savings account, you can put aside a specific amount every month that you don’t pay tax on. The money you’ve saved, should you need to withdraw some of it, or all of it, won’t be penalised by the taxman. “Try to save something while your salary is small; it’s impossible to save after you begin to earn more,” says Jack Benny.

Take advantage of this investment offer before your expenses grow along with your salary and you find it difficult to put anything aside.

Rule 4: Develop wealth building habits

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Wealth building habits

You need to adopt habits that lead to wealth and help you to build a solid financial foundation. Multiple, small smart choices consistently conducted over time, will create wealth. But, it needs to be consistent and over a long period of time. “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do,” says Mark Twain.

Wealth building is not a get rich quick scheme, it will take years, potentially decades, but if you’re diligent you can reach your goals.

Rule 5: Hustle. Hard

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Hustle

You need to work harder than everyone else around you because if working at average speed could grow wealth, everyone would be wealthy.

“There is no such thing as overnight success or easy money. If you fail, do not be discouraged; try again. When you do well, do not change your ways. Success is not just good luck: it is a combination of hard work, good credit standing, opportunity, readiness and timing. Success will not last if you do not take care of it,” says Henry Sy.

Hard work will help you to accomplish your wealth making goals. “I still work hard to know my business. I’m continuously looking for ways to improve all my companies, and I’m always selling. Always,” says Mark Cuban. You need to always be considering ‘how can I work harder?’, but also smarter to increase wealth. Don’t become complacent about your methods, as it could lead you down a challenging wealth creation path.

Rule 6: Create multiple revenue streams

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Multiple revenue streams

Investing your savings is a way to create multiple revenue streams. There is also the potential of part-time work, but note that freelance work is growing in popularity amongst those looking to increase their incomes.

“Building wealth is about creating value and then recapturing that value in financial compensation. Whether it’s providing services, knowledge, or experience, if you aren’t creating value then there’s nothing for you to build wealth with,” says Jim Wang of Bargaineering.com and Microblogger.com. “This value can also take many forms. It can be actual monetary value or it could be providing entertainment or saving time or reducing headaches. The more creative you are, the more opportunities you’ll see.”

Rule 7: Know how to manage your money

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Manage your money

You need to learn how to work your money so that it benefits you the most. “The single biggest difference between financial success and financial failure is how well you manage your money. It’s simple: to master money, you must manage money,” says T Harv Eker. Without this skill your money is going to underperform and it will take a lot longer to reach your goals of wealth.

Until you study up and learn how to manage your money, you could try this suggestion from T Harv Eker: “If you don’t have the money management skills yet, using a debit card will ensure you don’t overspend and rack up debt on a credit card.”

Rule 8: Hire expert help

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Hire a financial expert

If finance is not your area of expertise, and you’ve accumulated knowledge but now you need insight that can only be delivered by a professional, then you need to hire them.

“The wealthy person has three best friends: her attorney, her accountant and her adviser. The wealthy tend to use the law and tax code to their advantage when figuring out how to maximise their wealth, especially over multiple generations, and they are not afraid to spend money up front for counsel to get these answers,” says Justin Kumar, a portfolio manager. “The wealthy look at value over cost, but they are still prudent in their decisions.”

Once you’ve implemented every rule, start again, ensure that you’re constantly working on improving your finances, reducing your expenses, increasing your savings and investments. Once you have the rhythm of wealth-building in your genes, stick with it until you reach your financial goals.

Next slideshow: 20 Things Millionaires Aren’t Sharing With You

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Richard Branson

Nicole Crampton is an online writer for Entrepreneur Magazine. She has studied a BA Journalism at Monash South Africa. Nicole has also completed several courses in writing and online marketing.

Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.

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Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.

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Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on Entrepreneur.com.

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.

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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel

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Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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