What is the first step to wealth
Turn your finances inside out! | The 7-step program
to more prosperity
Who doesn't dream of being rich sometimes? Who does not wish to spend their retirement years in financial security?
For many people, half a million or even a million euros seems like an unattainable goal. But the good news is: no matter where you are now - you can turn your finances upside down and build up a substantial fortune!
Read here how you can restart financially and spend your old age in prosperity.
The first step: motivate yourself!
"The more you save today, the more your later self will thank your younger self," recommends American financial expert and bestselling author David Bach. His money advice books, which have sold millions of times, have become a standard work among financial planners. David Bach's simple message is: you need to motivate yourself and redefine your priorities.
Because in order to live in financial security, you have to recognize your personal goals and pursue them consistently.
But never forget: You can't buy happiness! The well-being of your family and loved ones should come first. Therefore, you should not achieve your financial goals at the expense of your relationship and family obligations, but rather in harmony with your partner and family.
► What is your personal goal?
Depending on age, marital status, income and previous wealth, the personal goals of all of us are different. Whether it is the house that has been paid for in old age, the holiday apartment in Spain or the opportunity to leave the children a beautiful inheritance.
► Financial independence
People are living longer and longer and many demands increase with age. That is why everyone should make private provision for old age. The sooner you start, the better. Because the compound interest effect rewards all those who start early to regularly put money aside.
Tip: If you have children, you should start setting aside a small amount each month for your children. Your children will one day appreciate it highly.
One thing is certain: Nobody can look to the future, but financial independence in old age is important for everyone. Because in old age you are dependent on your own pension benefits from your younger years.
Step 2: Take stock - where are you now?
Many normal earners, who take stock of the assets they have earned so far, at some point are faced with the big question: Where has all my money gone?
Because even if a considerable sum of money is paid into the account every month, many Germans fail to build up sustainable wealth. The average wealth of Germans is below the values of many other EU countries. The reasons for this are diverse.
But if you want to improve your wealth, then you have to stop simply spending your money and start investing it instead!
► How to take stock:
After you have formulated a goal in the first step, you should now check how far you are from this goal.
Take a piece of paper and try to estimate how big your current wealth is. How much cash do you have in your account and savings book? How much wealth do you have in the form of stocks, bonds, and insurance? Do you own real estate? Do you need to repay loans? Have the house and the car been paid off?
After that, you should determine what types of asset classes your money is currently invested in. This calculation is important to understand how best to invest your money from now on. (More on this in step 7.)
A small consolation for people on a tight budget: thanks to your contributions to social security systems, statutory health insurances and public pension insurance, you have a difficult to quantify in Germany„capital“ in the form of state benefits and pension rights.
Remember: It is important to be realistic about your wealth and to remain positive. Even if the current wealth is at or even below zero, you can still manage to increase your wealth!
Bottom line: if you want to get wealthy, you need to start spending significantly less than you earn. The money saved must be invested profitably.
Step 3: The Income Page
An important component is the income side. Because the more you earn, the more you can put aside. Unfortunately, it's not always easy to make more money. Because a promotion or a new and better paid job are not always immediately realizable.
Even so, there are often ways to make more money. Three tips for higher income:
► Are there hobbies that you can monetize? Can you teach something (e.g .: tennis, math tuition or computer programs) or maybe produce and sell something yourself (e.g .: programming websites or making gifts for Christmas markets)?
► Are you fairly paid for your work? Is there any way you can get a promotion or work more overtime? Confidently speak to your boss about your desire to earn more and explore your options.
► Do you have a technical or entrepreneurial talent? Could you be self-employed as a part-time job or run small businesses? Can you, for example, repair cars and vintage cars, restore furniture or sell antiquarian books?
Step 4: The Expense Page
It is of the utmost importance that you begin to control your expenses so that part of your monthly wages is not simply wasted every month.
The first thing you need to do is analyze where your money is going. The best way to do this is with a pen and a small notebook or cash book. Consistently write down what you spend your money on for a month or at least two weeks. Make a note of every single expense, both small and large monthly payments.
After 14 days or a month, you have to check your cash book to see which expenses are really necessary and which are superfluous. How much money do you spend on monthly fixed costs? How much money for groceries in the supermarket and how much for transport costs? Do you have astonishingly high expenses for restaurants, cigarettes or expensive hobbies?
How can you reduce heating costs?
Now you need to find out where you can save money. Loan repayments, rents or operating costs are fixed costs that you cannot easily reduce. But what about other costs? Have you discovered cost traps in your budget book that you can avoid in the future? Is it possible to reduce monthly fixed costs (e.g. telephone & internet, insurance, electricity & gas, gym membership, etc.) by changing contracts or providers?
In order to be able to put more money on the high edge, you must then follow two things: Reduce your monthly expenses rigorously AND under no circumstances spend the money saved on other consumer goods, but start investing your money profitably!
Tip: Go inside and check whether all of the consumer goods you think you need are really necessary. Do you really need a new car or a new XXL flat screen TV? Do you really have to live in an expensive rental apartment in the trendy district or wouldn't a condominium be better after all? Do you have a weakness for expensive travel or for clothes and furniture stores?
Conclusion: If your long-term financial independence is more important to you than purchasing short-term consumer goods, you will be able to save on large and small expenses.
You can read the next three steps in Part 2:
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