This article is a continuation of my previous post: “8 Keys to Financial Success.” If you haven’t read the previous post I suggest visiting http://www.jacobspaulsen.com/personal-development/8-keys-to-financial-success and catching up on it now. The 8 Keys to Financial Success are designed to help people with an existing stream of monthly income to achieve wealth and financial freedom. In the previous article I outlined keys 1-4. Here I will outline 5-8.
- Let Money Work For You. Now that you have began to build your emergency fund and have paid off any credit card debt you will begin to have excess cash-flow. This “excess” cash-flow can now be channeled towards investing. How much? No less than 5% of your monthly income should be put toward investments and after your rainy day fund is built and your credit card debt is gone you should be contributing between 10-15% of your income every month toward investments. Where & What? You need to purchase assets. Assets are investments that put money back into your pocket. Your job is to find assets that will increase your monthly cash-flow and bring you closer to financial freedom. If you are wondering which investments are safe, the answer is that only the investments you are totally familiar with and comfortable with are safe. The risk of the investment is based on your own knowledge of it.
- Multiple Streams of Income. No one source of income in this world is 100% solid. You could loose your job or main source of income at any time and it therefore becomes necessary to have a back up stream of income. It also goes to reason that the only way to come closer to financial freedom is to work harder at your current job or to get a second income source. I am an advocate for owning your own business instead of getting a second job. Only by owning your own business are you creating leverage and potential residual income which is the base of true financial freedom. Look for opportunities or ideas that will allow you to build a side-income. Don’t be afraid to invest some cash and some time into the success of a side business since it may become your greatest asset.
- Automate Your Finances. The reason a lot of people don’t achieve their financial goals is due to a lack of discipline. Even after you begin to track your finances and set goals it can take a lot of work and discipline to carry them out. Learn to automate everything possible about your money to guarantee achieving your goals. If you can set up an automatic transfer from your checking each month to your rainy day fund, or a auto-pay on all your bills do it. Take human error out of the picture as much as possible to ensure achieving your goals.
- Educate Yourself. The last key to your own wealth is education. In order to be worth more you must first become more and in your financial stewardship this can only be done by increasing your financial education. Read business and investing books. Study the industry of your side-business and seek out advice from successful people in your family and in your industry. Learn everything you can about different investment strategies such as stocks, bonds, real estate, hard money, etc. Attend local seminars about wealth building and investing. Teach what you learn to all those around you.
If you can harness these 8 keys of financial prosperity you can achieve any financial goal you choose. You aren’t limited by your income but by your own financial intelligence and skills. Learn, Plan, Do.