7 Financial Rules You Must Understand Right Now Although only a small portion of the world’s population is born with a silver spoon, if you are one of the large groups of people who weren’t born into wealthy families and you are serious about getting wealthy then I urge you to stay with me because in this article I will show you how to create multiple streams of passive income.

There are many ways to make money, with the most common ways being earning a salary, generating business income, or earning from your streams of passive income. You can also get wealthy by inheriting

1. Use Good Debt And Avoid  Bad Debt

Being in debt isn’t all that awful, however it depends on the type of debt you have. The main question is whether it’s good debt or bad debt first. Only a small percentage of individuals are able to pay cash for everything they need in life, including a vehicle, home, and a college degree.

what is good debt

An investment might be deemed to be good debt. The goods you obtain through excellent debt typically improve in value or provide revenue over time. A student loan is an example of good debt. A student loan will cover a student’s tuition costs and other educational expenses throughout their time in college. The loans are repaid once the student has graduated and found a job that pays a salary. They have very little interest and increase the value of the borrower by preparing them for future employment.

Another good debt example is a mortgage. The interest on a mortgage is tax deductible, and because payments are spread out over a long period of time, you’ll have the chance to use the cash you have on hand to invest in other ventures. You could even rent out a portion of your home and make some money from it while you’re still repaying, and don’t forget the chances of property appreciation.

Bad debt

currently, though, there is terrible debt. Bad debt is incurred to pay for products that depreciate quickly and do not produce revenue over the long term. Its excessive interest rates are another hallmark of bad debt. Smart individuals approach bad debt with a straightforward set of questions: Can I afford it? Do I truly need this item? If not, why should I pay so much interest on something I don’t actually need? Here are a few instances.

First, there’s acquiring bad debt to keep up with your peers, also known as consumer debt, for example, let’s say you use a credit card to purchase a high-end handbag that costs you $1,000 over time. If you are unable to pay off that debt, the interest will keep rising while the bag will eventually wear out, go out of style, and lose value, costing you more than $1,000 in total.

Payday loans and cash advance loans are two more examples. In summary, debt isn’t always bad, but not all types of debt will help you go ahead either. These are the worst kinds of debt since the interest rates are excessively high and you will be charged additional processing fees and penalties if you can’t return the loan by the due date.

2. Capitalize  on free money

Why pay for something when  you can get it for free one of the best  ways to have money is to save money and  what better way to save money than to  have access to free stuff when I talk  about free money

one example are  scholarships and grants a scholarship is  a payment made to an academic  institution on behalf of a student which  is meant to cover their academic related  expenses over the course of the program  scholarships can be awarded by the state  a corporate organization or an NGO as a  reward for academic Excellence or simply  as a form of Charity scholarships are  not loans and the student is not  required to pay back after he or she has  graduated and found employment

if you’re  a student about to go to college why  don’t you try out for a scholarship  however if you’re no longer in school  don’t worry because there is a ton of  free money out there in the world for  you too for those in the workforce one  popular way to make free money is by  contributing to your employer’s 401k and  receiving an employer match a 401k match  is generally set up as a percentage of 

an employee’s salary commonly around six  percent the employer’s contribution is a  certain percentage of the employee’s  contribution a generous employer will  match the entire employee amount making  a dollar for a dollar or a hundred  percent contribution other companies  contribute 50 or less of what the  employee pays in let’s use a worker with  a salary of fifty thousand dollars as an  example if she contributes six percent  of her salary into the company’s 401K  she will have three thousand dollars in  the plan after the first year if your  employer does a 100 match she will have  six thousand dollars in the plan

if your  employer does a 50 match or three  percent of the employee’s salary she  will have forty five hundred dollars in  the plan either way she is receiving  free money from her employer just by  saving for her own retirement and if you  want to achieve significant wealth then  you must take advantage of free money  whenever you can

3. strive to make make your time more  valuable

as a popular saying goes time  is money making money takes time and  what you do with your time matters a lot  in the Quest for gaining wealth as far  as what you do with your time there are  high value activities as well as low  value activities high value activities  are those that you do with your time  that can earn you income or improve the  quality of your life on the flip side  low value activities are those  activities that do not bring in any  income and they do not improve the  quality of your life low value  activities steal your money instead of  multiplying it

some examples of high  value activities include making business  plans working on client projects  researching new Investments exercising  and getting adequate sleep on the  contrary low value activities could be  gasping at the office instead of working  spending long hours at the bar drinking  or over sleeping in short if you want  your fortunes to change for the better  then engage in more high value  activities

4. Commit to a Budget

This  is another major rule of money if you  cannot control your spending then you  cannot save one of the best ways to  control your spending and save is to set  up an expenditure budget and stick to it  you should have a maximum amount of  money you can spend on a daily or  monthly basis this is an amount that  would be taken out of your earnings and 

it should be used for your daily upkeep  the rest of your earnings should be  saved and reinvested many people are  broke simply because they cannot commit  to a budget this causes them to buy  pretty much any attractive item they  come across even when they don’t need it

5. it’s not how much you  make it’s how much you keep

person a  earning more money than person B doesn’t  necessarily mean person A will be richer  than person B if you earn three thousand  dollars a month and you spend four  thousand dollars per month it means you  are in debt and you are broke the smart  move for that individual earning three  thousand dollars per month is to spend  two thousand dollars say 500 and invest  five hundred by doing this you are not  only stashing money away for a rainy day  but you are also investing do the math 

if you save 500 per month in 12 months  you would have saved six thousand  dollars and that is a decent sum of  money keep in mind that you have also  been dedicating 500 monthly to  Investments if the Investments are  panning out right then you’re already on  the path to long-term Financial Freedom  the standard Benchmark for saving is at  least 10 percent of your monthly income  you can raise the bar by saving up to  twenty percent of your income

if you  feel you can do it it doesn’t matter if  you earn a hundred thousand dollars  every month if you squander it all on  items that add no value then you will be  poorer than the person who earns three  thousand dollars and saves and invests a  percentage of their money each month 

6. Double Your Portfolio  Every 10 Years

for you to be truly  financially free you need to make your  portfolio as Diversified as possible  Investments are meant for the long term  and when the time comes for you to start  reaping the benefits have it at the back  of your mind that you also need to  double your portfolio take out time to study

the market you want to invest in  and determine if they will be profitable  or not choose the best possible stocks  and add it to your portfolio if you do  not have the Investor’s third eye which  is used to spot profitable markets then  you can hire experts to assist you in  picking the right stock if you can do  this every 10 years then just imagine  where you would be in the next 30 years 

7. Join The Profit Stream

If you’re an employee of a business and  you want to break away from earning the  same salary at the end of each month  then it’s all in your hands what you  need to do is join The Profit Stream of  that business and stop depending on your  salary alone trust me the business makes  much more than you can imagine and your  salary is peanuts compared to what the  owners are making let me give you

A practical example let’s assume you work  in a car sales company as an accountant  and you earn a salary of fifteen hundred  dollars per month do you know you can  triple your earnings if you find a way  to bring potential buyers to the car a  lot and convert to sales you can speak  to your employer about your plans tell  him or her that you’d like to get more  customers for the business and you’d  like to earn a commission on each sale  you make

they would most likely agree to  your proposal since the reason they are  in business is to make sales too  regardless of who is bringing the buyer  now let’s say you managed to sell a car  worth ten thousand dollars and you’re  entitled to a five percent commission  that will be an extra 500 added to your  existing salary this is

if you sell just  one car imagine being responsible for up  to five car sales in a month the  commission you would make on these sales  put together will be more than the  salary you earn in your quest for a  better financial position it is always  better to be part of The Profit Stream  as opposed to being just a salary  yearning employee