What’s the secret to not being broke? Some may tell you it has to do with not buying lattes at coffee shops, but money expert Jaspreet Singh said it’s not true.
In a video on his YouTube page, Singh said there are 15 moves you need to make which can keep you from being broke or experiencing becoming broke again. See if you follow all 15 secrets to not being broke.
1. Grade Your Finances
Get out a piece of paper or open a Google Sheet or Excel spreadsheet. Start by writing your income and your income sources, which may include your employer and/or investments. Then, subtract every single expense by reviewing your bank and credit card statements to see where all your money has gone. Singh recommends categorizing your expenses such as groceries or eating out.
Now you can easily see your monthly income, expenses and any money leftover. From here, you can review whether you were able to invest, save or give this leftover money to charity. Once you are able to see what you’re doing with your money, you know where the money is going and can better optimize it. Singh said most people are shocked the first time they conduct this exercise and work to find ways to reduce expenses so they have more money.
2. Spend Less Than What You Make
Once you see the amount of money you bring in every month, you cannot spend more than this amount. If you do, you won’t have any money leftover and will be unable to invest your money to build wealth.
To start spending less money, Singh said you need to see where your money is going and strategically cut back.
3. Pay Yourself First
Here’s what it really means to pay yourself first. Singh said paying yourself first doesn’t mean treating yourself. It means building your wealth first which is done by investing your money. Create a system in which you always put aside money to invest and save, no matter how much you make.
The biggest mistake people make with their money, Singh said, is spending it first and investing and saving whatever is left. Wealthy people take the reverse approach by investing and saving first and spending whatever is left.
4. If It’s Not Paying You, It’s Not an Investment
Singh uses the example of someone who walks around in designer clothing. If you can afford it, it’s not a problem. However, if you’re broke and struggling to make ends meet you don’t need to be paying a premium to advertise brands. They’re not paying you to do that.
5. Turn Your Annual Income Into Your Monthly Income
If you’re making $50,000 a year, Singh said you can turn this amount into $50,000 a month. To achieve this, Singh said you need to start learning about how you can earn more money. How can you build a business or create a new stream of income which allows you vastly increase the amount of money you’re making? Singh recommends starting by watching YouTube videos, reading books and purchasing courses and/or coaching to try out new things and earn more money.
6. Get Rid of Your New Car Payment
Singh uses the example of someone who has a new car payment of $717 a month. What if you didn’t have this payment? What if you could invest this monthly amount, receive a 7% return on your money and do this for 40 years? Instead of having a car which is worth nothing in 40 years, Singh said you would have almost $2 million.
What if you still need a car and can’t necessarily get rid of it? Singh said you can take the down payment you would use for a new car and use it to buy a used, reliable car with cash. The money you would have spent on the monthly car payment can be put toward making you richer.
7. Make Less Speculative Investments
Many people in the early stages of building wealth will search for ways to get rich quickly, such as buying a meme stock or investing in cryptocurrency. Because these are speculative investments, however, most people lose a big chunk of their money on them.
Instead of looking for the next hot thing, Singh recommends investing in something which has good long-term value to make you money.
8. When You Inflate Your Income, Don’t Inflate Your Lifestyle
The biggest mistake people make when they receive a raise, bonus or promotion is spending all of this money. When you make more money, suddenly your expenses increase because you need to celebrate and celebrations, like new cars, are expensive.
If you receive a raise, Singh said don’t spend this money and invest the money into assets which will pay for your lifestyle.
9. Don’t Make Emotional Financial Decisions
This is true of your money and your investments, such as panic-buying or panic-selling stocks.
According to Singh, the stock market runs on emotion. The people who make money, however, are the people who invest not based on emotion.
10. Stop Financing Things That Don’t Pay You
Just because you can buy something doesn’t mean you can afford it.
If you really want to be able to afford something you don’t need to survive, Singh recommends following his rule of five. If you can’t buy five of them, you can’t afford one of them.
11. Pay Off Your Credit Card
Before you go out and start investing your money, Singh recommends paying down your credit card debt. This is because the credit card interest rates are eating you alive financially.
12. Don’t Touch Your Emergency Fund
Build up an emergency fund with between three months to 12 months’ worth of expenses inside. Then, don’t touch it unless it’s an actual emergency. This fund is designed to protect you from unforeseen emergencies. A sale on clothes doesn’t count.
13. Sell Your Junk
If you have things in your home which do not have sentimental value and are taking up space, consider selling these things on platforms like Facebook Marketplace to make extra cash.
14. Talk To Your Partner
You and your partner need to be on the same page about money. If you’re not on the same page, Singh said it can cause a lot of tension and friction both in the relationship and with your finances. Talk to your partner about financial goals to get on the same page together.
15. Don’t Chase Money
It may sound like a cliché, but Singh said the moment he stopped chasing money was when he started making money. When you chase the value, purpose and mission, you can do a lot more of the things you care about compared to doing it just for the money.
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