Financial management is not a short-term one. Cultivating correct cognition and habits little by little is the only way to move towards financial freedom.
The purpose of savings is to be financially free. To do this, you must have ten cognitions and good habits. There are four main tips: belief first, tool second, practice third and proper management fourth.
I. Establishing financial freedom is the goal and firm conviction: the difficulty of things often depends on the attitude of the person involved. Some people say that the probability of success can be seen from the degree of willingness to sacrifice something. How big is it? If financial freedom is optional, then random results are often difficult to achieve. Only by understanding its importance, determining goals, and firm beliefs, can financial freedom be achieved through methods and efforts! This is the same reason as the Dalai Lama said, ‘‘If you know where to go, the world will make way for you.’’ Financial freedom must be achieved, and it must be achieved through methods and efforts.
Second, put on the head of a rich person: Remind yourself at any time that a person has only two legs and four feet of money. Let the fast-moving money work hard. Becoming a rich person is usually not achieved by high salaries, but by means of income, through savings, into investments that will make money and earn money, in order to obtain sufficient and amazing passive income. To achieve financial freedom, the head decides to act, and the head of the rich is replaced!
Third, fully grab the first bucket of gold: With faith, you also need tools. To have a big tree that you can enjoy in the future, you need to bury small seeds or saplings. People can work, and money can work. The first bucket of gold is an indispensable sapling. Then, under the condition of health first and no betrayal of the soul, try to grab the first bucket of gold. (Recommended for you to see: Saving is the ability to dream for yourself in the future)
Fourth, continuous improvement of professional capabilities: The first bucket of gold can come from several sources, and investing in your own expertise and ability often brings in not just a bucket of gold, but a steady stream of mines.
5. No matter how much income you have, you must have savings of more than 20%: It’s not enough to just keep track of your accounts and understand the movement of your expenses. Instead of spending most of your time keeping accounts, you have no money to save. It is to compulsively deposit 20 to 30% of the monthly income into a financially free investment account and redistribute the remaining expenses. This is a habit without discounts and compromises.
6. Constantly looking for sources and methods to expand income: upgrade and refine your profession, and the remuneration you receive is the main channel to the first bucket of gold, and the “sideline” that has excess capacity and time in your own interests is Accelerating to reach the tributary of the first bucket of gold is also the role of the soldiers.
7. Disciplinary investment: Correct investment is an acceleration train to achieve financial freedom, and it is also the most critical. Dispelling greed, fear, and impatience is one of the important elements of correct investment. Within the scope of risk tolerance, to develop disciplinary investment, don’t stop because of the stock market decline. The more fearful the people around, the better the chance. I have mentioned the A-Gump investment law and the tactics of using Taiwan’s economic indicators as a reference for entry and exit, or a mix of Taiwan and US stocks. In the medium and long term, I have hardly missed, and the results are above the level. It is worth a reference for investors. For details, please refer to 10 Minutes a Year, Turn Your Salary into Money.
8. Pursue honest investment returns: The secret to getting rich is not short-term and unsustainable high returns, but steady stable compound interest growth, pay attention to your strengths, and understand where you cannot. The selection and analysis of individual stocks require the integration of theory and experience. It may not be the strength of most people. Investing in world-class companies or competitive countries and tracking the entire stock market are the preferred index funds. Although the speed of achieving financial freedom is slower, it’s The chance of success is far greater than just relying on small money and wanting to roll into big money through operating skills. Remind yourself at any time to say “no” to improper greed. It is often one of the main reasons for the fiasco of investment. Put this thinking in your mind and become a habit of natural reaction.
Nine, the investment strategy of asset allocation: Asset allocation is an investment tactic that focuses on both defense and attack. It seems that you lose at the starting point, but actually you win at the turning point. The beauty is that it can be tailored to individual risk tolerance, eliminating greed and fear of natural enemies. If you know how to use it, both active and passive investments can be played to a higher level. For details, please refer to my second book, ‘‘What You Haven’t Learned from Buffett, The God of Silence Is Doing Silently.’’
X. Pursuing a balanced wealth in life: As long as there is a belief in insisting on goals, reasonable savings and correct investment, it is not difficult to achieve financial freedom of money. The speed in the front will make you doubt, and the speed in the back will be surprising, so always remind yourself to pursue a balanced wealth of life, otherwise, you will get financial freedom and you may miss the wonderfulness of other life; balanced wealth is life Real wealth.
Ways to becoming rich
In summary, there are usually three ways to become rich:
The first way is through hard work and frugality. As long as you develop this good habit, I can say with great certainty that you will join the ranks of the rich, and the sooner you start, the easier this habit will become and the greater your chances of success. The wealth gained from diligence, and then transferred to the investment channel, does not need to be high. As long as there is a reasonable return on investment, you will see it grow and flourish like a money tree.
In a second way, some people can use less money to find good investment targets, and constantly use the wonderful effects of compound interest to grow in a steady-state. This difficulty is higher than the first one because it takes a lot of learning and experience to find a good investment target, not to mention the fact that it is necessary to practice steady growth, which is even more difficult.
The third way is to seize the opportunity or use your advantages to start a business. This requires the development of some good habits because a person who can successfully start a business often has the qualities he needs.
The above three methods all need to form good habits, but the methods are different. The first is the easiest, so I hope you start here. But be reminded that rich people do not mean rich, why? Because having a balance of five balls in life is real wealth. You can think about your answer first and discuss it with your parents, so you will understand the difference! (Further reading: Financial management does not mean making money! What you should invest in is the basic concept of financial management)
So who can be both rich and wealthy? Buffett did it, and the three ways to get rich made the most of it. This is not easy. He is the object of my study. Let’s work together!
This article is an excerpt from “Finance Lessons for Wall Street Traders for Young People” by Yu You. Reprinted with permission from Yuanliu Publishing. For the complete work, please refer to the original book.