Let’s face it…everybody could use more money.
Well, except maybe Bill Gates. He’s probably an exception to that rule.
It is sometimes difficult not to sound envious when we talk about wealth. It’s not that we have to have more, it’s just that most of us would like a bit more wiggle room when it comes to our personal financial health.
The fact is, you’re probably not going to get rich anytime soon.
Another fact is that you’re probably still trying to make each paycheck stretch. Perhaps that works for you, but how does it feel living paycheck to paycheck?
I know. It sucks.
We’ve all heard of “get rich quick” scams. The trouble is that they sound too good to be true most of the time, and people tend to miss the point anyway. Even more important is the fact that people are so afraid of losing money to a scam that legitimate things are often overlooked.
Today, I want to point out that getting a start in the right financial direction is actually a lot easier than people often think it is. In fact, it’s a lot like dieting…the most effective changes to make are the small ones. It’s not the huge set of tasks that get you where you want to be, but the small changes that make a difference over the long term.
Essentially, there is one thing that everyone needs to do, and that is to increase cash flow. The trick is that there are two different ways to increase your cash flow, and by using both of these methods, the amount of disposable income that you have will go up.
Step 1: Decrease Spending
In the past, I have had arguments with people who told me that it’s okay to “live up to your means”, which meant that they thought it was perfectly fine to spend money until they were out. They were wrong. If you spend all of your money on junk, what will you put into savings? And what about all of those bills? Every month money goes out for things like credit cards and other things. Credit cards are not inherently evil, they just tend to be huge money sinks for most people.
Ideally, it is best to reduce balances on credit cards, pay off smaller debts, and eventually pay down debt. This is usually a great first step. Here’s an example…if you are paying $150/month on a credit card, try to knock this out as fast as you can. When it’s paid off, you’ve got an extra $150/month to use on other things, like savings or investments (or paying down other debts).
Less outgoing money means more money that you keep.
Step 2: Increase Income
No, I’m not saying that you should just run out and get a second or third job. If that works for you, then by all means, go for it!
For those of us that are a bit more lazy than that, there are better ways than trading time for money.
There are a couple of things that I do in my spare time to help give a small boost to my income. These are generally more passive in nature (meaning I don’t have to clock in and/or do a lot of work to earn money). The first thing I do is invest in dividend stocks. I don’t put a lot in, so I don’t make a lot off of this, but if you do have the will and means to invest, make sure you are getting something out of your investment. All you have to do really is invest in these stocks and you will earn money back from the dividend payments. That’s money you don’t have to work for!
Another thing that I do that is fairly passive is affiliate marketing. It takes a bit of know-how, but it’s really easy to get into with no investment. A bit of creativity and an account with someone like CenterPoint Media can go a long way when it comes to earning income with little or no investment.
The bottom line is that you need to do two things if you want to build your wealth: increase your incoming cash and decrease the outgoing cash.
I’d love to hear your take on this! Leave your comments!
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