Finance tips
This is how rich people increase their money
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Having so much money that you never have to worry about it – many people probably share the dream. But how do wealthy people actually increase their wealth further? A financial planner has three simple answers.
Every year the American business magazine "Forbes" publishes a list of the richest people in the world. Always there: Bill Gates, Jeff Bezos or Elon Musk, who have an unimaginably large fortune. Of course, they still feed on their earlier ideas and inventions – but how do wealthy people actually manage to increase their money even further?
Increasing your money is not that difficult: 3 simple tips
Jason Howell is a financial planner and author of Joy Of Financial Planning. In it, he reveals one or two exciting tips when it comes to finances. Just like how already rich people continue to increase their wealth. And, according to Howell, that's not all that difficult. The most important point up front: You have to be patient. According to "Business Insider" it is not about earning a lot of money particularly quickly – but about "a slow and steady process".
1. Knowledge is power
Howell works with rich people every day, according to Business Insider. And they all have one thing in common: They value constant further training. In other words, just because we are successful with our current level of knowledge is far from being enough. The saying "You never stop learning" is also confirmed here. The good news: We don't have to catch up on our Masters in Business Administration directly. Further training can also be done with smaller steps, for example with a good book, online courses or YouTube videos. And we don't have to grapple with complicated financial issues, if they're not at all ours. Of course, a certain amount of knowledge is a prerequisite – but we will be able to use our newly acquired knowledge early enough. No matter whether as expert knowledge on the job or as an introduction to networking.
2. Do not operate “lifestyle inflation”
Salary increase or vacation pay in sight? Wonderful, we've wanted to buy a new car for ages. Finally there is more in it for us! But stop – the phenomenon that the more money we have, the more we spend, is called "lifestyle inflation". And it is very obstructive in the sustainable development of wealth. At least, according to Howell, we are not alone in this. But every time we have more money in prospect, and make a larger investment, it is – logically – harmful to save money. The financial planner recommends investing it so that we don't have to watch our newly earned bills get dusted in our bank account. And the rule here is: those who are there earlier will have more of it later. And because we are not necessarily investment professionals ourselves, we resort to tools or the help of our bank advisor.
3. Keep everyday life as plain and simple as possible
If our (monthly) income increases, the responsibility that we get with a new job usually also increases. That also means: Our professional life demands more and more concentration and focus from us. Maybe not in the first step yet. And certainly not as much as is required of a Mark Zuckerberg. But: We can make daily routines as easy as possible so that we have our heads free for important decisions. This also means that we have more time to concentrate on complex topics. And less about what we wear today or what to eat tomorrow night. According to Howell, this is also a tactic that you can use in your investment strategies: Even discerning investors like to put their money in simple index funds. And then it stays there for the time being and is not checked every two days. Because those who give things time also reap their laurels. This also applies to the mostly unpredictable economic fluctuations to which our assets are subject.
Media used: forbes.com, businessinsider.de