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Been wanting to write a piece on how I understand money & wealth, & how "mindset" is actually a thing.
I've also been avoiding it for two reasons:
1. I don't consider myself rich
2. Anything related to mindset is cringe & wishy-washy bs
Alas, here I go. Money thread.
1/
I've also been avoiding it for two reasons:
1. I don't consider myself rich
2. Anything related to mindset is cringe & wishy-washy bs
Alas, here I go. Money thread.
1/
Firstly, most people have a poor relationship with money due to lack of education.
It's nobody's fault, most of us weren't born in a wealthy family who could teach us to understand wealth in a proven way.
A few fundamentals & heuristics go a long way in avoiding being poor
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It's nobody's fault, most of us weren't born in a wealthy family who could teach us to understand wealth in a proven way.
A few fundamentals & heuristics go a long way in avoiding being poor
2/
Rule of thumb #1: avoid most debt
Debt spent on assets (things that generate a return) is up to each one, but generally a good idea
Debt spent on consumption (TVs, phones, trips, etc.) should deduct 15 IQ points from your score
You can't afford it yet, move on
3/
Debt spent on assets (things that generate a return) is up to each one, but generally a good idea
Debt spent on consumption (TVs, phones, trips, etc.) should deduct 15 IQ points from your score
You can't afford it yet, move on
3/
Rule of thumb #2: saving won't make you rich, but it's a great start
If your job makes you 50K a year, even if you save 100% of it (
) it will take you 20 years to reach 1M
Gurus are right: to become rich, make more
However, it all starts with saving 1st, to invest later
4/
If your job makes you 50K a year, even if you save 100% of it (
) it will take you 20 years to reach 1MGurus are right: to become rich, make more
However, it all starts with saving 1st, to invest later
4/
Rule of thumb #3: divide your month in weeks
Say you make 2K/month:
1st week (500) is for mortgage
2nd week is for utilities & food
3rd week is for other monthly spendings
4th week is for saving
Mortgage is paid with 3 of the 4 weeks? Well, mortgage might be a bit high...
5/
Say you make 2K/month:
1st week (500) is for mortgage
2nd week is for utilities & food
3rd week is for other monthly spendings
4th week is for saving
Mortgage is paid with 3 of the 4 weeks? Well, mortgage might be a bit high...
5/
Rule of thumb #4: cut unnecessary costs
Gurus will say cancelling Netflix & saving 10 bucks per month won't make you rich
True
But, cutting unnecessary costs you can live without that represent 30% of salary & can be used to save to later invest might be the start you need
6/
Gurus will say cancelling Netflix & saving 10 bucks per month won't make you rich
True
But, cutting unnecessary costs you can live without that represent 30% of salary & can be used to save to later invest might be the start you need
6/
Rule of thumb #5: don't get into a shit mortgage
I know it's easy to say, but getting into a mortgage you cannot afford is the definition of playing yourself
If you make 50K per year, you cannot afford a 500K house, simple
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I know it's easy to say, but getting into a mortgage you cannot afford is the definition of playing yourself
If you make 50K per year, you cannot afford a 500K house, simple
7/
Rule of thumb #6: don't dump all your savings & paying cash in one go
Above I said to not get into unnecessary debt
Well, if you have 20K saved up, letting go of it in one go to buy smth will expose you to unecessary risk
Leverage part of it to get a decent loan
8/
Above I said to not get into unnecessary debt
Well, if you have 20K saved up, letting go of it in one go to buy smth will expose you to unecessary risk
Leverage part of it to get a decent loan
8/
You may have noticed the above is more about "avoiding being poor" over "how to get rich"
Thing is, avoiding the common mistakes which make people poor is a good place to start
Most don't want to be rich, they just wanna avoid being poor & enduring financial hardship
9/
Thing is, avoiding the common mistakes which make people poor is a good place to start
Most don't want to be rich, they just wanna avoid being poor & enduring financial hardship
9/
Most decisions that make people poor are living above your means, endlessly paying interest as a result of it & exposure to too much risk
That, & also thinking we are above the common person
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That, & also thinking we are above the common person
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