Get Good With Money | Top 10 Ways To Become Financially Whole | Part-2 | Lab Of Rich

Get Good With Money

In this blog, you will read how to get good with money and steps to become financially whole. The information provided is taken from the book "Get Good With Money" by Tiffany Aliche.

To Read First 5 Steps Click Here

6) Invest Like An Investor (Retirement And Wealth)

If we ask a youngster what is investing, then everyone will say that this is a method by which we can earn money from money. But if we ask how much they want to earn from Investing then they want to be billionaires like Warren Buffett. But according to the author, this is idiotic thinking.

According to the author, we need 3 steps for investing.

Step 1 - We should know how much money we need approx at the time of retirement. It should be a practical number.

Step 2 - How much can we save and how much % interest do we need so that we can achieve the amount calculated in step 1. To calculate the interest we can use the rule of 72. This rule states that if we need to double our amount in (x) years then divide 72 by (x). 

For Example - (72÷10=7.2), In this case, we need the interest of 7.2% to double our amount in 10 years.

Step 3 - Decide where to put your money i.e where you can put your money (PPF, Mutual Funds, or other platforms) so that you can achieve the % calculated in the previous step.

7) Get Good With Insurance

The author says that it is a very important part to become financially whole.

Many people think insurance is a waste of money because in maximum cases we do not get money from insurance until something happens to us. But those who do not have insurance and if something happens to them then in maximum cases their all savings get exhausted and sometimes they have to take out a loan also.

4 Types of insurance about which we can study are

• Health Insurance
• Life Insurance
• Disability Insurance
• Property And Casualty Insurance

8) Grow Richish (Increase Your Net Worth)

Net Worth is like body temperature, the only difference in this is that there should not be much body temperature, but in the case of net worth, we have to keep in mind that the net worth should not be less.

Formula to calculate net worth

(Net Worth = Assets - Liabilities)

Assets are the thing that if you sell them today you will get money.
For example - 

• Car (6 Lakh)

• House (60 lakh)

Liabilities are those things that take money out of your pocket.
For example - 

• An education loan (2 lakh)

• Home Loan (15 lakh)

Therefore net worth will be 

( 60+6-15-2 = 49 lakh)

If net worth is a positive number then it is good it means we have more assets than our liabilities.

Now we just have to try that when we calculate our net worth next time, it should be more than the previous net worth.

9) Pick Your Money Team (Financial Professional)

Remember one sentence "your environment will make you or break you" In short, you will become like the people around you.

That's why we should stick with those people who want to be financially free.

At the initial stage, we just need a financial partner with whom we can discuss our financial condition.

10) Leave A Legacy (Estate Planning)

On thinking of this, 2 reactions come to mind.

1st - We are scared because we are thinking of our death.

2nd - We think that we have nothing, so why should we think about this?

Answer To Reaction 1 - We are not God, so we have to die one day or the other.

Answer To Reaction 2 - We are talking about distributing the same net worth which we had calculated in the previous step. Whether it may be jewelry, a piece of land, or something else.

So now decide when to write your will and who should get what. Those people who are kinda aged need to think a little more about this step.

This step is also important for financial wholeness.

Conclusion

These are the 10 steps taken from the book "Get Good With Money" which will help us to become financially whole.

1. Budget Budgeting
2. Save Like A Squirrel
3. Dig Out Of Debt
4. Score High (Credit)
5. Learn To Earn (Increase Your Income)
6. Invest Like An Investor (Retirement And Wealth)
7. Get Good With Insurance
8. Grow Richish (Increase Your Net Worth)
9. Pick Your Money Team (Financial Professional)
10. Leave A Legacy (Estate Planning)

To Read First 5 Steps Click Here.