It comes as no surprise when they say “Money is a numbers game”. The more you understand the numbers, the easier it will be for you to create a plan so that you can finally achieve your ideal lifestyle.
The problem is that the vast majority of us never take the time to write down a lifestyle plan. Heck, most of us have never heard of one.
The basic idea is simple. You write down all of the things that you’d like to spend money on each month and then add up the total. The total is the income you’ll have to make to support your lifestyle.
Okay, granted, this is somewhat of an abbreviated list, but you get the point. Now let’s add all of this up. The total comes to £7,300 per month – that’s quite a lot, and we left quite a few items off the list too!
However, an income of that level is achievable if you follow some simple rules. Let’s take a look.
Getting out of debt with bad credit can be a challenge, but it’s vital if you want to start building wealth. Every time you take out a credit card or a loan, you have to pay interest to somebody else – that’s money you can’t put to good use to build your wealth. Interest payments drain your finances and make it impossible ever to create a secondary income.
Once you’re out of debt, the next thing to do is to put your money into things that grow in value. The best way to invest long-term if you’re a young person is to put your money into shares. Historically, stocks go up in value more than other assets, like bonds or cash in a savings account. Buying shares is buying capital in companies. You’re buying a percentage of the future profits of the company – money you can earn without having to go and work for it yourself.
The final stage of getting the lifestyle that you want is to sit tight and not spend money today. That can be a challenge. We don’t like the idea that we have to wait to get something that we want. It doesn’t feel natural. It is, however, necessary, if you want to get to that £7,300 per month (or whatever figure it was for your ideal lifestyle).
The more money you put into buying shares, the more your money will grow over time. £150,000 in the bank at 10 percent interest will generate £15,000 per year or more than £1,250 extra per month. Over time, the cash pile you have will compound, and you’ll find your money shooting up and up. It’s not easy, but it is possible.