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us
find out about credit reporting errors is after we apply for some type of
credit. All consumers can now obtain free copies of their credit reports
once per year from each of the three major bureaus. Please note that there
are a lot of fakes offering “free” reports in exchange for signing up for
some type of credit monitoring. Please visit
www.annualcreditreport.com
which is the official site to obtain your reports.
4.
READ ABOUT SELF-MADE MILLIONAIRES
Read
as much as you can on individuals that are self-made millionaires. You
should make it a point to make a file for yourself of self-made millionaires
to serve as a source of motivation.
5.
AVOID INSTANT GRATIFICATION
As a
society, we spend, spend and spend. Take a minute and think about some of
things that you have that you don’t need. At what point did you purchase
those items? If we are honest with ourselves, most of us would agree that
the majority of those items were impulse purchases. We saw it, we wanted it
and without much thought, we bought it. However, in order to build wealth
and improve our cash flow, we absolutely must conquer the habit of wanting
everything in life immediately.
6.
BUY A PRIMARY RESIDENCE
The
debate continues on whether it makes more sense to buy rather than to rent.
Over the past several months, the media has bombarded the public with
constant reporting on the “housing slump” and the “housing slowdown” in
different markets throughout the country. Owning your own home is, in my
opinion, the first step towards wealth creation. Even if you purchase a home
and it appreciates only 5% per year, that equates to a $5,000 increase in
net worth per year on a $100,000 home. If you think about it, the average
person is not saving $5,000 per year - some folks are not even saving $500
per year. Owning your own home is the equivalent of a forced savings
account. Renting, on the other hand, does nothing to build wealth.
7.
DISCUSS FINANCES WITH YOUR SIGNIFICANT OTHER EARLY
Talk
with your significant other about finances early in the relationship. Money
problems are the #1 cause for divorce in the USA. You can never begin too
early to start discussing finances in your relationships with your life
partner. We have been trained to shy away from the topic of money, as if it
were going to take care of itself. Women, in particular, tend to fall into
the role of letting the man handle all of the finances and remaining
clueless throughout the relationship. Give yourself and your partner the
opportunity to have the best financial relationship possible and bring these
topics into the open early in the relationship.
8.
LOCATE & STOP SPENDING LEAKS
If you
have ever uttered the following phrases, “money goes like water” or “I don't
know where my paycheck went,” chances are you suffer from at least one
spending leak. Spending leaks are the constant draining of funds on
seemingly insignificant expenses. One example that readily comes to mind is
buying lunch every day at work. Even if a person only spends $5/day for five
days a week, that totals $100 per month. If a person cuts back to even half
that amount, that represents a savings of $50/month. In order to locate your
spending leaks, track every single expense for the next 30 days and tally at
the end of the month. Also at the end of the month, notate next to each
expenditure whether the money spent was a want or need. I can guarantee that
you will locate at least $100 that you can recover if you adjust your
spending habits.
9.
DEVELOP A BUDGET
In
order to build wealth, you must know your cash flow. Most of us know very
well how much money we make every month but little, if any, idea of how much
we spend. Exercising control over poor spending habits is critical to the
pursuit of real wealth. Everyone should have a detailed budget broken down
into fixed and variable expenses readily available at a moment's notice.
Budgets force financial discipline when properly followed and financial
discipline leads to faster wealth creation.
10.
KNOW YOUR NET WORTH
Assets
minus liabilities equals your net worth. You should know what this number is
at all times and be very leery of any expenditure that doesn't add to your
net worth. Remember, net worth has nothing to do with how much money you
make - it has everything to do with how much money you actually keep. If
someone has an income of $100K per year and they spend $100K per year,
his/her net worth is a big fat zero. Be careful not to fall into a high
consumption lifestyle in which every dollar you earn is completely utilized
to maintain that lifestyle. Learn to live below your means and you will
quickly accumulate wealth.
******************************************************************************************************************
Danielle Johnson is an investor and licensed real estate agent with Williams
Realty and Investments. She specializes in Time Management, Money
Management, and Wealth Creation through multiple streams of income. She can
be reached at 773-551-5769. |
