What are the best personal finance tips?
Schools didn’t teach you personal finance. Your parents didn’t teach you the language of the money. If they did, most of it is wrong. Media pushes you the information that’s false. No wondering why most people are broke.
People say money won’t make you happy. Look, being broke won’t make you happy either. Money is like oxygen. If you don’t have money, you can’t help yourself, your family, your friends, and your community.
What’s the number one reason for divorce? Money problems!
In this article, I’ll give you the best personal finance tips.
Let’s dive in.
5 Personal Finance Tips You Were Never Taught:
1. Assets vs. Liabilities
Personal finance tip number one is to understand the difference between assets and liabilities.
Assets produce money in your pocket. Liabilities takes money from your pocket. That’s that simple.
Assets are stocks, bonds, rental properties, business, and anything else that produces positive cash flow. Liabilities – house, car, you name it. Anything else that doesn’t bring in money is the liability.
Most people work every day and spend their money on things that don’t make them wealthier. You have to quit buying liabilities and start buying assets. Take that money and buy assets that produce more cash.
2. Renting vs. Owning
Many of us have been taught to buy the house, thinking that renting is expensive and the landlord makes money.
There’s this thing called opportunity cost. Sometimes you would want to rent or lease because that money could be invested in other things. Always ask yourself, ”What’s the best use of my money?”
The thing is your car is depreciating in value. The money will not multiply if it’s in your house or car. You want to multiply your money by investing in assets that provide cash flow.
The best thing you can do is to rent where you live and own what you can rent to others. Same goes for cars – it’s better to rent rather than buy new.
3. Saving to Save Is a Mistake
We have been told to start saving money early. But the reality is, it’s impossible to become rich by saving pennies.
The first thing you have to do is to increase your income so that you can save more. Most people don’t have money because they never saved enough money or invested enough money for it to ever matter. The advice to save first is wrong. First, you have to create income and then increase your income and only then save.
And there’s only one reason to save money. Reason to save money is to invest it. Never save to save. Always save so one day you can make a big move and produce more money.
People save money but don’t use it to create more money. They buy liabilities, not assets. That’s a mistake, and you should avoid it.
4. Good Debt vs. Bad Debt
You’ve been told that debt is bad. People say to get out of debt. There are financial gurus that say to live debt free. But there is good debt and bad debt.
When is debt good? When you use it to grow your business or buy assets that produce positive cash flow. Debt used to produce more income is good debt. Debt used to consume, entertain or eat is bad debt. Again, assets and liabilities.
Greatest companies use debt to grow their businesses. Use debt to increase your income.
5. You Can’t Grow Without Selling
Selling is everything. Your business and life depend on your ability to sell others on things you believe in.
Regardless of your career selling is for you. No matter where you are right now at some point you will have to convince others.
The ability to get others like you is selling. Can you sell your ideas, your beliefs, your dreams to someone else? Selling affects every area of your life.
Learn how to sell, and you will never be broke.
Check out ‘Top 5 Books on Persuasion Everyone Must Read‘
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These personal finance tips will help you to reach your potential. Share them with your friends and family.