There are some things in life you don’t need to be aware of, like the fact that all Fruit Loop colors taste the same or the possibility that apples you buy at the supermarket may be older than a year. In this article, I will share with you 7 money rules the rich don’t want you to know that will make you view money in a completely new way because there are some things you need to know that others are withholding from you.
Rule #1: The rule of utility
What comes to mind when you think about having money? Do you consider putting food on the table, buying a new dress to wear to the club this weekend, or purchasing a new car? If any of these ideas pop into your head, it’s a sign that you grasp the true nature of money—that it is merely a tool we may use to buy the things we desire or need.
Unfortunately, many people make mistakes here because they don’t fully understand the true value that money offers. For instance, if your salary is currently low, it’s likely that you believe that increasing it will take care of the majority of your problems. Money can cure financial problems, but it can also cause a wide range of other problems. For instance, if your partner isn’t in love with you yet you’re working twice as hard and making twice as much money as you were before, you may be having relationship problems. You haven’t been to the gym in a month due to your hectic schedule, and your regular-fitting jeans are beginning to feel a little tight.
This is not to mean that you shouldn’t work to increase your income, either. Your total quality of life should be gradually rising as long as you are addressing more problems than you are generating. There isn’t a single individual on planet, though, who is completely problem-free, so it’s crucial to remember that. For instance, if you’re a millionaire, you might not have to worry about bills, but family members might constantly ask you for money. On the other hand, you could find it difficult to shake the fear that you might one day lose all the money you’ve worked so hard to accumulate. Consequently, even if you may aim to earn as much money as you can, never allow that deceive you into thinking that more money will come with a problem-free life.
Rule #2: The rule of time
The vast majority of wealthy people will tell you that time is our most valuable resource. Unfortunately, most individuals don’t understand how time plays a role in accumulating wealth, and as a result, the majority of people will spend the most of their lives in a condition of financial mediocrity. But those who do master time also tend to master money, and they achieve this by being aware of the two essential concepts I want to discuss with you right now.
First off, since you are only exchanging your time, it is practically difficult to exchange time for money. There are only so many hours in the day, and unless you are making an absurd amount of money every hour, it can be difficult to make a six-figure salary on your own. This is assuming that your goal is to make decent money and become wealthy before you enter adulthood.
The second issue with time is that as we become older, we often have less of it available to devote to earning money. For instance, I had no trouble working 14 hours a day when I was young and unmarried. However, time is not a resource you can utilize in order to get wealthy once you begin to have homeowner and relationship duties or when you add children to the equation. Because of this, when seeking to accumulate wealth, the wealthiest among us look farther than just their own 24 hours. The wealthiest individuals on the Forbes list are all business owners who have benefited from the time, money, and skills of others.
All of this is to suggest that in order to become wealthy, you must recognize the importance of time in the process of accumulating wealth. For instance, gaining the professional expertise necessary to advance up the corporate ladder takes time. It takes time to figure out how to launch your first business and grow it to the income levels you desire, and it surely takes time to use the stock market and compound interest to your advantage to become wealthy. – Ask Warren Buffett for proof! Building wealth is 10 times easier once you understand how to take use of both your own and other people’s time.
Rule #3: The rule of protection
Have you ever questioned why you go to work? Most likely, it’s not because you enjoy hearing about your coworkers’ personal problems or because you enjoy staying late to fulfill a deadline that isn’t feasible. For the majority of individuals, the solution is straightforward: you work to pay your bills and then retire. Unfortunately, while most people have the ability to accumulate, spending years working to earn the money they need to achieve their goals, they lack the ability to protect themselves, delaying their path to financial freedom longer than necessary.
So what does the ability to protect involve? We have to fight off enemies that want to steal your money every single day. Your wife has been pleading with you to take the trip, but it will cost you three years’ worth of savings. It’s the opulent house that your parents anticipate you purchasing to preserve the family name. The $60,000 vehicle is what you’re hoping will bring enthusiasm back into your life. These are all financial enemies that stand between you and your main objective of financial independence.
Anyone can go out and earn money, as you can see. How people handle their resources is what distinguishes those who become and remain wealthy from others who experience financial hardship. Internalizing this is crucial since, similarly to how a poor diet can’t be outrun by exercise, a spending problem cannot be overcome. The more guarded you are with your money, the better.
Rule #4: The rule of minimal savings
You have been instructed to save your money your entire life. Your parents advised you to put money away for a rainy day, the media advised you to hoard your cash, and banks are, of course, more than delighted to accept your funds. Should you really be saving money, though? No, never.
Saving money, as some people claim, is not the way to success and riches. In actuality, the only person who gains wealth from your savings is the bank. Banks use your money to make a significant portion of their revenue, which you might not be aware of. They collect your deposits and pay you a pittance while lending the money out to others at enticing interest rates. Does this imply that you shouldn’t make any attempts to save money at all? Obviously not.
Simply put, it means you should be more deliberate about how much money you keep in the bank. For instance, I only deposit into the bank the amount necessary to pay my regular expenditures and any unexpected needs. Being on the more cautious side, I prefer to have a year’s worth of costs saved up, but for someone just starting out, having anywhere from 3-6 months set up is an excellent objective. I then spend the remaining funds on investments like index funds and real estate.
You should aim to save as little as possible while investing as much as possible since doing so enables you to create considerably higher profits than the bank could possibly offer.
Rule #5: The rule of expectation
If you’re like most people, you’ve undoubtedly persuaded yourself that you won’t be satisfied until you reach a particular salary or net worth level. I’m sure I’ve told myself this countless times, but over time I’ve realized—and perhaps you have too—that achieving our stated objectives never truly fulfills us; instead, it only motivates us to move the goalposts even more. Personally, I promised myself that I would be content as soon as my income at work reached $80,000 annually. Once I arrived, though, I made the decision that making $100,000 would be preferable to making $120,000, and so on and so forth.
Does this mean you shouldn’t set yourself financial goals? In no way. But delaying happiness till later is a grave mistake, and regrettably, the majority of us continue to do so every day. Now, why is it crucial to understand this?
Even though you probably related to what I said when I said it, most of us don’t really internalize this idea and instead constantly moving the goalposts. And what I’ve learned over time is that when our current state and desired state don’t match, this is when irritation and unhappiness occur. Let’s say, for illustration, that you started a brand-new job last year with a salary of $75,000.
Once those payments started arriving, you were more than happy because this is the income you knew you deserved. You believe you should be making $80,000, yet despite a year of excellent performance and the accumulation of more experience, your salary is still $75,000 instead. Resentment begins to grow when you suddenly believe that you should be earning $5,000 more per year but aren’t. Your expectation gap is this $5,000 difference, and as long as it persists, you’ll never be content.
People who earn $150,000 annually, for instance, may feel sad because they feel they should be earning $200,000. Contrarily, there are individuals earning $50,000 annually who are overjoyed since they had never anticipated earning more than $40,000. To be financially comfortable, you must therefore reduce the gap between your expectations. You can achieve this by aiming higher or by lowering your expectations. Regardless of what you decide, there’s a good chance you won’t be content until you make it.
Rule #6: The rule of privacy
Most people would list all the things they would buy if they won more money if you ask them why they want to become wealthy. But is that truly the point of being wealthy?
Wealth, according to author Morgan Housel of the book The Psychology of Money, “is what you don’t see,” and he couldn’t be more correct. Many of the wealthiest people I know don’t drive fancy cars, live in fancy homes, or do anything extravagant. However, your eyes would likely roll back in your head if you saw their financial accounts. However, if we look a little closer at what this proverb really implies, it really gives us some direction on how to go about accumulating riches.
Again, the adage “wealth is what you don’t see” refers to the idea that part of getting affluent is not bragging, serving as a pleasant reminder that all the material possessions we acquire are in direct conflict with our aim of achieving financial abundance. We can all agree theoretically that the more you buy, the less money you have, but it can be difficult to put financial conservatism into reality.
Even if life isn’t all about saving and investing, the more of it you can do the faster you’ll become wealthy. There’s always that new car or vacation beckoning to us. So, if your current goal is to get wealthy so that you can buy everything, you might want to reconsider. Don’t equate financial success with possessions; instead, focus on the sense of control and freedom it can bring. I say this because the more you require, the more difficult it is to become richer, but the contrary is true the less you need.
Rule #7: The rule of obligation
What’s the best thing about being a kid? No, it’s not having your mom choose your clothing or heading outside for recess. Being a child with no obligations and no worries in the world is the finest. Sadly, we must ultimately assume some obligations because we can’t stay in this condition of total joy forever. We assume obligations, for instance, at work, in our homes, and more particularly in the assets and liabilities we acquire.
Now, the items we purchase do do offer us additional utility. As an illustration, purchasing a home provides us with a place to grow our family and hopefully an asset that will increase in value over time. It does, however, take just as much as it offers. For instance, it forces us to make monthly mortgage payments, worry about home repairs, and maintains our ties to a single city or town. It’s absurd that this is an instance of productive debt. The upside is almost zero when compared to other types of debt, such as credit card debt.
At best, you get a little convenience, but you also have to deal with continuing interest fees and repayments, each of which reduces your financial freedom a little bit more. The wealthy know that having riches has less to do with how many things you possess and more to do with how little stuff owns you. In other words, your level of wealth is directly related to how free you feel. While having a big house or a fancy car is great, when these things start to limit your daily activities or force you to live a certain way, they suddenly reduce your level of wealth, regardless of how easily you can afford them.
Therefore, your objective should be to free yourself of financial ties in order to feel richer regardless of how much money you have. Pay off your credit card and school loan debt. Aim to be mortgage-free; when you do, you’ll feel far wealthier than you do now. Well, people, I really appreciate you reading this blog. Please share your comments with me below.