One of the most lamented facts about our modern education system is that it fails to teach kids key life skills—like managing finances. Today, only some schools teach any kind of financial literacy and those that do usually only teach the bare basics.
As a result, millions of Americans have been left completely ignorant of how money works or how to manage it.
To help, we put together a list of things they didn’t teach you in school that can help you manage your finances, whether you’re just starting out or finally taking charge of your financial life.
1. Invest Your Money Early And Often
When you invest your money into assets, you have the ability to reap incredible gains over the long term.
You should approach any asset with a long-term focus where you won’t panic if you take initial losses because you believe in the future of the stock or real estate property you invested in.
While you can lose money as an investor, you’re guaranteed to lose money if you keep it in the bank as inflation will gradually eat it alive. You can invest in high-growth stocks that carry greater risks and rewards, or you can pick safer dividend stocks that provide cash flow.
Investing rewards people who invest early and often due to its compounding nature. The more time you give your investments to work, the more money they can potentially earn. Compound interest — interest earned on the principal plus the interest you’ve already earned — is a powerful tool in your financial toolkit.
2. Save Until it Hurts
The formula for building wealth is simple: Save more and spend less. You can become wealthy over time if you do nothing more than saving diligently and investing wisely. But you have to do it. Try to save at least 20% of your after-tax income every year, no matter what. Remember, if you’re not in pain from the amount of money you’re saving each month, you’re not saving enough.
Choose a traditional savings account, money market account, or certificate of deposit with an interest rate that compounds monthly. For best results, shop around to find the highest return on your money.
Save to invest, don’t save to save. The only reason to save money is to invest it later. Put it in a safe and untouchable account. Never use these accounts, not even for an emergency.
3. Stay out of debt
Debt is pretty much the opposite of wealth. Every day millionaires stay out of debt, especially credit card debt. Instead, they save up for what they want. And if they do get into debt, say for a house or student loan, they pay it back as soon as possible.
Millionaires know that debt doesn’t lead to wealth and you can’t beat the system by racking up credit card bills.
4. Find a mentor
Finding a mentor is also essential to growing your wealth. It’s not just about having someone there to cheer you on. A good mentor will help you grow and teach you not just what to do, but what not to do. And they will keep you on track if you falter along the way.
If you can’t think of anyone off the top of your head – this may help.
5. Increase Your Income
Okay, so you are now maximizing your earning potential and saving as much money as you can from your salary. The next step is finding ways to make even more money and invest it. If your goal is to build wealth you need to master the side hustle and make money in other ways than just your full-time job. This can really be anything, including driving for Uber, consulting, or building websites.
6. Develop a Millionaire Mindset
Whether it is $100 you get from participating in a market research study or $10,000 for building someone’s website – it should all go directly into an investment account.
Fully visualize how you would move through the world as a millionaire – and then start acting that way today.
Everyone always reports that they feel more confident, more outgoing, happier, more enthusiastic, and more energized.
Millionaires understand the importance of starting today. Think about it…most millionaires didn’t become so overnight. They started saving consistently….the earlier the better.