What you don’t often hear from a lot of people is how they accumulate their wealth. You just hear that this one is rich, that one is rich, she is rich. The HOW part is often silenced.
Surely, there are several ways of making money nowadays both online and offline. Some people climb the corporate ladder and somehow become rich, others own businesses while a few receive returns from properties they own.
Regardless! In this article, I’m going to share with you some tips on how to make money.
1. Differentiate an Asset and a Liability
So many people don’t know the difference between an asset and liability. They make bad financial decisions without even realizing it.
An asset refers to anything of economic value or future benefit that you own whereas a liability is something you owe.
A mortgage is a liability because it’s money you owe the bank. A house, piece of machinery, car, investments, artworks, or home goods are all personal assets because they can generate cash flows in the future when you sell them. Your savings account is an asset. High-risk investments like mutual funds and stocks, patents, and copyrighted works you own are also assets.
If you can invest in more assets, those assets can generate enough cash flow for you to live on.
2. Help People Solve Their Problems
For me, the secret of making money either online or offline is by helping people solve their problems. In fact, almost all businesses exist for this very reason, they help people in solving their problems in one way or another.
Take, for example, Telecommunication companies allow people to stay connected to their loved ones through data and cellular services. Eateries solve people’s demand for food.
Just solve people’s problems and you will make money in due process.
3. Use The Law Of Supply And Demand
You must be pretty familiar with the law of demand and supply – the higher the quantity of a product or service, the cheaper it becomes; contrariwise if there is a scarcity of the same product or service, it will become more expensive.
This simply implies that if you do something that most people won’t do or if you become very good at something most people don’t want to do at all, then you can make plenty of money.
If you’re aspiring to do something that many prefer to do as a hobby, it will be difficult to make money out of it. Choose a unique talent or skill that is rare and monetize it. An example would be; web programming career over modeling.
4. Know When To Switch Or Quit Your Career Path
If you’re working hard and your career path is going nowhere, resign gracefully and switch careers.
Take time to research occupations, find out their salary scale, and what plans they have for the future.
Find a job that is willing to pay you well and invest in your education/training to get you the job.
If you’re a graduate and you won’t find a job, invest in professional courses that are in high demand and you will be good to go.
5. Acknowledge That Time Is Money
Your ability to manage your time (and stop procrastinating) is a secret ingredient to making money. Whether you have a job or are self-employed, prioritize what you’re spending your time on.
Divide your time and ask yourself “Which of these activities require more of my time and make the most money?”
6. Redefine Wealth Building
Have you taken the time to study millionaires? You do be surprised that most of the millionaires aren’t engineers, doctors, lawyers, or corporate leaders with fancy cars and big houses; they are people who graciously live below their means and invest the surplus into assets other than liabilities.
They understood the difference between an asset and liability and how to live a normal life like everyone else.
In fact the majority of the people who flaunt their wealth publicly for people to see actually have low net worth because their debt to asset ratio is very high. In other words, they owe a whole lot of money than they actually have.
7. Actively Invest And Track Your Net Worth
If you’re aiming at building your fortune, it’s vital that you learn how to invest your money. There are several ways you can invest your money depending on what risks you’re willing to tolerate.
As you invest your money, you should also track your progress and evaluate your net worth.
8. Stay Out Of Debt
If you’re having a high debt dependence, work on eliminating the habit as soon as possible.
You only make someone else rich when you have a high debt load; whatever you pay as interest is their paycheck.
You can only eliminate this cycle by repaying your loans and debts as soon as possible.
9. Start Analysing Your Decisions From The Perspective Of A Firm
In economics, a firm’s sole existence is simply to maximize profit. Established firms only spend money where they can get better returns from their investment and they allocate their resources to the best use.
But of course, you’re not a firm. Nevertheless, if you base your efforts, time, and energy on choosing options that promise the highest returns on your investment, you will likely make more money and that’s just good news for your shareholders(you and your family)
10. Work On Earning More Than You Spend
Consistently spending more than you earn is the ultimate way to accumulate debt.
To stay out of debt, work on creating more income streams and spend within a budget line.
- Beware Of Get-Rich-Quick Schemes
A lot of people often get caught up in them in their pursuit of financial freedom. If the opportunity is too good to be true, probably it is. People who know how to get rich are busy establishing businesses, climbing the corporate ladder, and creating real investment portfolios. They don’t advertise on how to get rich.
Don’t lose over-sight in your quest for money. Surely you may be able to earn more money if you put in extra hours and effort, but at what cost does it come. Will your family still get your time and enjoy the extra money.
As much as money can do a lot of things for you, don’t sacrifice your happiness and all the things that give meaning to life for the sake of money. You won’t take money with you when you die.
I hope you find this piece of information useful in your quest for financial freedom.
If you want to say anything, want to appreciate, or have more tips and warnings, kindly use the comment form below.