How To Become Rich With Salary
In this blog, you will learn about how to become rich with your salary.
Develop A Rich Mindset
You need to have a rich mindset. There is a difference between a rich mindset and a poor mindset. Let us understand the rich mindset by taking an example.
Let us consider 2 characters.
Alex and John.
Let us give 1 crore to both of them and let us see what they will do with the money.
When Alex gets 1 crore he buys a new phone, a new car, and a new laptop. He goes for a luxury vacation with his family, buys new clothes, and spends all his money. After 1-2 years his financial condition is back to normal.
When John gets 1 crore he buys books, and courses to learn investing and business management. He invests his time and learns about investing and starts his part-time business. After 5-10 years his investments get increased and his business gets successful and the amount of 1 crore becomes 10 crores.
Alex's mindset was poor, therefore the amount he got was all wasted, whereas John's mindset was rich, therefore the amount he got was increased to 10 crores. Here both characters got equal amounts but both used that amount differently. This states that your present situation doesn't matter, all you need is a rich mindset.
To develop a rich mindset you can read -: Think and grow rich, The psychology of money, Rich dad poor dad, etc.
Difference Between Need And Want
Needs are those things that are necessary for your survival. Eg- food, clothes, shelter
Wants are those things that are not necessary for your survival and you spend money on them uselessly. Eg- costly phones, costly cars, etc
Nowadays there are some wants which have become our needs like mobile phones and the internet. Therefore to recognize something is a want or a need you can wait for 1 week or a month without buying that thing. If after 1 month you feel that you need that thing then buy it otherwise not.
And remember don't take anything on EMI because if you will take something on EMI then you are paying a larger amount to buy that thing.
Don't spend your money on wants, if you are an editor then you can invest your money to buy a new laptop if you are a gamer you can invest your money to buy a new phone or gaming pc. These are investments not wants.
3x Rule
This rule states that if you can't buy one thing thrice at the same time, then you can't afford that thing. Maximum people spend money on those things which they cannot afford.
To understand this practically let's take an example: If you are going to take a car worth five lakhs, then you must have at least fifteen lakhs in your account. If you don't have fifteen lakhs in your account then you can't afford that car. If you are taking a car on EMI then you are making a huge mistake.
50-30-20 Rule
It is a very powerful budgeting rule. In order to follow this rule, you must have 3 qualities within you and that is discipline, patience, and knowledge of investing.
Now as the rule states, 50% of your income should be spent on your daily needs, which can be food, clothes, house rent, EMI, etc. These are those things that are necessary for you to live your life. If you can't afford your needs in 50% of your income then you need to increase your income.
30% of your income should go towards your wants, which can be going out to eat, party, buying a new phone, etc. These are those things that are not necessary for you and you can survive without them.
20% should go towards your investments. You can start a monthly SIP in mutual funds or index funds or you can directly invest in stocks. But in order to invest in stocks, you need to have the knowledge and know how to do a fundamental analysis of companies. You can read books, and blogs, and watch videos to gather knowledge about investing.
Point to be noted -: Don't increase your expenses as your income increases. When your income is increased, then invest that extra amount in stocks or mutual funds.
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