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5 Strategies That The Rich Use To Make $100,000 Every Year

There are five major strategies that many financially successful people employ in order to become rich and wealthy while others struggle financially.

By AndeutPublished about a year ago 8 min read

We’ll be discussing actual methods and behaviours that nearly all wealthy people employ in order to become wealthy.

1. Keeping Track of Expenses

A very important thing that financially successful people do that the majority of the population does not is keep a money tracking system. Do you have an exact answer when I ask you where you spent your money last month? Do you have an exact answer when I ask you what percentage of your total income is used on living expenses, what percentage is saved or invested, and what percentage you used to spend for fun?

See, without an understanding of your own money, it becomes more difficult to make and manage more. Learning to track every dollar in your control will not only help you manage the money you have now, but when the time comes to make and manage more money, you will be able to make more informed decisions. Putting all of your money transactions into three main categories is a simple way to start tracking and taking control of your personal finances:

your income everything that brought you money that month, including a job, a side hustle, or business income 2.

your monthly living expenses It is critical to understand what your minimum recurring expenses are. These are things like your rent or mortgage, your bills, your food, and other necessities. Despite the fact that this number does not change very frequently, many people are still unaware of what it is.

your other costs These are things you pay for but don’t necessarily need, such as a Netflix subscription or your daily cup of coffee, or any other non-essential expenses you have. Categorizing your personal finances allows you to track your spending much more easily by understanding how much you make, how much you actually need, and how much you’re spending on other things. This allows you to make more informed financial decisions.

2.Rich People Are Consistent in Their Efforts to Save Money

It’s not surprising that most self-made millionaires are also very good at saving money. After all, no matter how much a person makes, if they spend it all, they’re leaving themselves in a vulnerable financial position. Remember, it’s not about how much you make, but how much you keep. This is so important that if you read any major financial book or listen to any successful entrepreneur, you will discover that saving money is one of the foundations of building long-term wealth.

Surprisingly, according to CNBC, 57% of Americans have less than $1,000 in their savings accounts, and 39% have no savings at all.

Saving money can be difficult, but there are a few methods that can make it easier to save money.

The first and easiest method is to automate your savings in multiple bank accounts. You can schedule transfers from your main bank account to your savings account as soon as your paycheck arrives, before any expenses are deducted from your main account. If you have already saved money, this is fantastic because it does all of the work for you; you simply set it up once and forget about it, and it becomes more difficult to overspend because a portion of your money is already locked away. Another good way to keep your money away from temptation is to keep your savings account in a separate bank.

There is no debit card and no checking account. Just a good old savings account this will make it more difficult for you to access the money making it easier for you to keep it saved see there are two ways you can begin saving more money one is to focus on spending less the less money you spend the more money you have to save the other is to focus on increasing your income the more money you’re able to make the more money you’re able to save now saving money is only the first step having money in the bank does not automatically make Let me ask you a question: would you rather have a million dollars in cash or a million dollars in real estate or good companies?

The wealthy prefer the latter because cash is just cash. If you save a million dollars in cash ten years later, you will still have a million dollars despite inflation, which makes the dollar worth less every year, but if you have a million dollars in equity in real estate, for example, those million dollars will be worth much more in ten years than they are today.

According to Warren Buffett, cash is always about investment. I’d rather have a good business than cash, which leads me to

3. The wealthy invest their savings in cash-generating assets.

As previously stated, saving is only the first step; the wealthy do not save for the sake of saving; rather, they use their savings to build true long-term wealth. Once we’ve established a system for consistently saving money, it’s time to put that money to work multiplying it. Consider the board game Monopoly; the game is about who owns the board, not who has the most money.

You cannot win the game by simply holding cash; the goal is to get rid of the cash in order to own property that generates cash. In the end, the person who owns the majority of the board is the one who gets the money, so would you rather have cash or a cash-generating machine? The rich used their hard-earned money to build or buy a money-generating machine that generates passive income; this is where they no longer work for money, but their money works to generate more money, which brings me to my next point.

4. The majority of wealthy people live below their means.

It may be difficult to believe, but most people with real wealth always live below their earnings, especially in the beginning when they did not have their wealth. If you look at most of the people who have amassed massive wealth in the last ten years or so, you’ll notice one thing in common: they were quite frugal with their living.

Most of them did not buy expensive cars or massive mansions even when they were making a decent amount of money. There are many people who make six multiple six or even seven figure incomes who buy all the luxuries and spend the majority of their money, but the ones who actually get wealthy have a bigger vision in mind they’re not looking to make a couple million they’re looking for massive wealth so many of them even when they’re already making a decent income they still spend money like the common citizen.

I like Grant Cardone’s example because he says that even if he was a millionaire, he would still not buy new clothes because he would say, “I would wear the same raggedy clothes even if I had a million in the bank.” The idea is to start by getting used to not needing much so you can invest money into building your long term wealth even as your income rises.

This is not only a strategy but also a powerful habit because, as we all know, businesses go up and down; there are good times when money is flowing and bad times when cash flow could be better. Learning not to need much in order to have a great life is an important skill to stay strong even in difficult times and when the time comes to buy luxuries, they will feel like luxuries rather than burdens eating up your money.

This is how they can spend ridiculous amounts of money on luxuries without ever running out of money.

5.They spend the residual rather than the principal.

Many wealthy investors never spend the principle; instead, they spend the residual that the principle generates. Most people begin with active income, which is the income we work for. When you start investing in income-generating assets, you begin generating passive income, which is the cash flow generated by your assets. The difference between wealthy people and the rest is that those who are building real wealth only spend the cash flow generated by their assets, not their hard-earned money.

It’s similar to planting a tree; most people eat the seeds before planting the tree; the wealthy planted the tree first and only eat what it reproduces. Many wealthy people still have active income; they continue to run their businesses and make money. The difference is that they only use their hard-earned money to invest and only buy their luxuries with the money their money generates; this is how they ensure they never run out of money, even when purchasing expensive luxuries.

Now, what is a good practical step to get started on your journey to wealth? As previously stated, in order to start investing, you must first save, and in order to save, you must either lower your expenses or increase your income, with the best results coming after you lower your expenses.

The first step is to concentrate on increasing your monthly income; the more money you make, the more money you have to plant your money tree.

personal finance

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