9 Money Principles That Can Make You Wealthy

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In this blog post, I want to share with you 9 money principles that can make you wealthy.

I have a passion for learning, especially when it comes to anything about building a business, growing my money, and living a fulfilling life. These are fascinating topics to me (and these are the topics this website focuses on).

By applying these 9 simple principles, I was able to become financially free in just 26 months. If you are interested, you can read more about my story here.

It is my hope that this blog post, along with these 9 money principles can bring you inspiration and a blueprint to becoming financially free. With that being said, let’s dive right in!

9 Money Principles That Can Make You Wealthy

Money Principle # 1: Pay Yourself First

This is probably one of the most fundamental and important money principles that can make you wealthy, and that is why this is listed as the first money principle here.

What pay yourself first means is that before you use any of your monthly income for paying any bills, take out a portion and invest that into your own assets (such as your savings, emergency funds, investments, insurance, retirement funds, etc).

Some experts suggest allocating 10% – 20% of your income to paying yourself first. Of course the higher the percentage, the better.

Tight with money?

Start with whatever % you can. And, gradually increase the percentage as you increase your incomes and/or decrease your expenses.

Why Pay Yourself First?

Statistics have showed that most people don’t save enough for their emergency fund or their retirement, because they claim that they don’t have the money to save more.

I get it.

Sometimes, it feels like there are always more days at the end of the month than money.

But that is exactly the reason why you should always pay yourself first. Prioritize this over and above any of your other bills. Making this like the most important ‘bill’ you must first pay.

With this approach, it dramatically increases your chances of putting away a more substantial amount of money for your future, and also forces you to make saving money a MUST rather than just a nice to have.

RUN OUT OF MONEY?

Of course, some people will argue that if they pay themselves first, then they won’t have enough money to pay their other bills or they will run out of money before the end of the month.

I understand the concern.

However, to be honest, oftentimes that is really not the case, especially for people who live in metropolitan cities.

If we take a closer look at our bills, most likely we will find that we have expenses we are able to cut out. That fancy dinner at the restaurant? Cable TV that we hardly use at home? The nice pair of high heels or dress we just bought? Or could we look for a phone/internet company with lower payments?

In my opinion, most of the time, it is really just a matter of setting your priorities and being disciplined to plan for your future. And by paying yourself first, you are taking steps to creating a better financial future for yourself and your family.

Hate Budgeting?

I totally understand. I hate budgeting too.

That‘s why I am recommending this book called The Automatic Millionaire by David Bach.

In this book, Bach talked about a very simple money management strategy – the concept of automation!

In other words, setting up to have your Pay Yourself First money automatically transferred to your investment accounts before you even see it (along with a few other awesome and yet super simple strategies!). The concept of automation is absolutely GOLD! Grab this book NOW, apply these simple strategies, and you will see how easy it is for your money to grow.

Money Principle # 2: Identify Your Money Belief

What are your core beliefs about money? Do you have negative associations or do you have empowering associations?

Some Negative Money Associations

Money is the root of all evils (sounds familiar?)
Rich people are bad. They are dishonest.
Money does not grow on trees.
Money makes people more materialistic.

Some Empowering Money Associations

Money gives choices and freedom.
The more value you give, the more money you earn.
Respect money.
Rich and successful people are generous.

THOUGHTS AFFECT OUR RESULTS

Our thoughts affect our feelings, our feelings affect our actions, and our actions affect our results.

Therefore, if you have negative associations with money or if, deep down inside, you believe that money is evil, then your subconscious mind is going to repel money and make sure that you do not make more money.

Even if you do make more money, you will somehow lose it.

Have you heard of people who have won a large sum of money through the lottery, and then within a few years, they have lost all their millions of dollars and gone back to their original lifestyle or even worst?

That is because deep down inside, they don’t believe that they deserve the money or they don’t want to be wealthy.

Millionaire Mindset

If you want to become wealthy, you MUST first establish a healthy relationship with money. I strongly recommend you to start with reading the book Secrets of the Millionaire Mind by T. Harv Eker.

This is an EXCELLENT book on the topic and you will set yourself up for a wealthy mindset to exponentially grow your money. This is one of the first few books I read on the topic of personal finance, and it is still one of my all time favorites.

Money Principle # 3: Know Where You Are Today Financially

This is the step where you actually complete your Income Statement and Balance Sheet.

And, figure out how much Incomes, Expenses, Assets, and Liabilities you have.

On your Balance Sheet, Assets put money into your pocket and Liabilities take money out of your pocket.

FACE YOUR FEAR

I know, I know, this can be a very scary step for many people.

If you feel scared, you are definitely not alone.

Of the many people I know, many were scared to look at their finances. Some are scared because they are ‘afraid of numbers’, or perhaps they have been burying their heads in the sand, wanting to avoid their financial reality.

I totally get it.

However, just because you don’t look at your numbers, your financial problems won’t automatically go away. In order to improve your finances, you MUST first know where you are today. And the best way to do that is just to face it head on and figure out your numbers – filling in your Income Statement and Balance Sheet.

Once you have done that, you will have a clear picture of what your finances really look like currently, in which case you can then figure out a plan that works for you.

Continue to update your Income Statement and Balance Sheet as you make progress, and you will start to gain confidence and enjoy the process more and more.

Money Principle # 4: Make More Money Than You Spend

Make more money than you spend… Well, this should be obvious, right?

And yet, statistics show that most people in the USA live paycheck to paycheck or spend more than they make and get into more and more debts.

Let’s do a test, shall we? If I ask you today how much money have you earned this month, do you know the answer? Chances are that you will know exactly or at least you have a rough idea. However, if I ask you today how much you have spent this month, would you know?

Most people have some idea on their income but have no idea on what their total expenses are each month – let alone, what the breakdown of those expenses look like.

So if you want to decrease your expenses, it is logical that you must first know what those expenses are (aka, where did my money go?)

Tracking Your Expenses

Therefore, your first step is to track your expenses. I know it is difficult to track all your expenses everyday. So, one way to do this is to put all your expenses on your credit cards and debit cards so that all your items are summarized on your statements.

Ideally, you want to track this for 1 month (more accurate). However, if you feel that 1 month is too long or too difficult to do, then at least make the effort to track your expenses for 7 days. With this exercise, you will have a better idea on your expenses and their breakdown.

Once you track your expenses, you may be surprised to see just how much money you are actually spending (the cup of Starbucks every morning, the lunch at the cafe, the cookie in the afternoon?)! Review these expenses and see if there are items that can be cut out. At the minimum, you will be more aware of your spending habits in the future.

Don’t Be The Joneses

Don’t just buy expensive things to keep up with the Joneses. Your neighbour just bought a new car? Well, you don’t need to buy one just to look good.

There is a saying that goes, ‘We buy things we don’t need with money we don’t have to impress people we don’t like.’

Don’t be one of these Joneses.

Now of course, there is a limit on how much expenses you can cut. I do understand that there is a minimum spending in order for us to maintain a minimum living standard. And cutting your expenses too much can eat into your spirit. Therefore, if cutting expenses is no longer feasible or desirable, then you should look into increasing your income and/or acquiring and building assets that generate incomes ~ which leads into our next important Money Principle.

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Money Principle # 5: Acquire and Build Income-Generating Assets

The rich buy assets. The poor only have expenses and the middle class buys liabilities thinking that they are assets.

Robert Kiyosaki

BEST SELLING AUTHOR OF RICH DAD POOR DAD

If you want to have more money or to become financially free, the best way is to start acquiring and/or building income-generating assets.

Below are some examples of income-generating assets.

Examples of Income-Generating Assets

Interests from high-yield saving accounts
Dividends from stock portfolio
Income from traditional/brick-or-mortar business
Rental incomes from real estate portfolio
Income from franchise businesses
Royalties from books/music/inventions
Income from network marketing businesses
Income from online businesses
Affiliate marketing incomes from your blogs

You can have your money work harder for you with smart investment strategies, you can start a side hustle/part-time business to increase your income, and/or acquire businesses to add to your list of income-generating assets.

When it comes to starting businesses and investing, spend the time to learn the fundamentals. Read books on Personal Finance. Take courses. Hire a coach to guide you along, have a mentor who has already achieved what you want, take courses, and attend seminars to learn.

You will likely make some mistakes at the beginning, so start small and build up your knowledge, experience, and confidence along the way.

Useful Resource – Fast Track To Financial Freedom

Money Principle # 6: Manage Your Debts

Debts can be a double-edged sword.

If you leverage debts well, they can drastically help you to advance in your finances. But if you mismanage debts, they can also drag you down quickly.

To understand debts more, notice the flow of your money in regards to debts. Are your debts helping to put more money into your pocket? Or are your debts taking money out of your pocket?

If your debts are taking money out of your pocket every month, especially if these are high-interest debts/loans such as credit card debts, you may want to take a closer look to see if these are debts you can pay off, or at least gradually pay down.

As you review, pay attention to whether you are able to consolidate some of your debts together, and move them under to a lower-interest plan, thereby reducing your overall expenses.

Money Principle # 7: Reduce Your Risk
by Diversifying into Different Asset Classes

Over the course of your financial journey, there are bound to have economy cycles in the market. The market will likely go through bulls and bears, blooms and recessions (or even depressions). Similarly, your businesses can also go up and down.

So it is important to understand your risk tolerance and to reduce your risks by diversifying.

However, when I say diversifying, I am NOT referring to what most financial advisors will tell you. Most financial advisors will tell you to diversify into different types of stocks, mutual funds, and ETF. They are often referring to diversification within Paper Assets.

When I say diversification though, I am referring to diversification into different Asset Classes.

4 Main Types of Asset Classes

Below are the 4 main types of Asset Classes.

Paper Assets (stocks, mutual funds, ETF etc)
Real Estates (residential, commercial and industrial real estates)
Businesses (traditional businesses, franchises, network marketing, online businesses)
Commodities (gold, silver, oil, gas, corn, wheat etc)

Diversifying into all 4 asset classes will help you to be more resilient against any major market drops compared to just being diversified in one asset class or not diversified at all.

Again, understand your own financial risk tolerance and learn about the pros and cons of each asset classes.

Money Principle # 8: Be Responsible /
Take Care of Your Finances

You are the CEO of your life and your finances are YOUR responsibilities ~ they are NOT the responsibilities of your parents, your spouse/partner, your children, your teacher, your employer, your government, and they are not even the responsibilities of your accountant, bookkeeper or your financial advisor.

It is not how much money you make, but how much you keep and what you do with the money that matters. Look after your money, because no one else will care about it as much as you do.

Review your income statement and balance sheet often to see exactly where you are (recommended once every 3 months and no less than once a year).

By tracking your status, you will see whether you are making progress in terms of saving more money, increasing your incomes, reducing your expenses, reducing your debts and adding to your assets.

Take baby steps and celebrate every milestone. The more you continue through this process, the more empowered and confident you will feel.

Money Principle # 9: Be Generous and Give Abundantly

Last but not least, be generous and give abundantly. Giving is a powerful action that can bring more abundance into our lives, because when we are giving we are saying that, ‘I have plenty’.

As you continue to give more, you will also be blessed with more.

Donate to your church, donate to a charitable organization that you support, donate your gently used clothes/shoes/toys to non-profits, give your time by volunteering, organize a beach cleaning day, plant a tree, start a fundraising campaign for a cause you believe in or go on a voluntour.

One of my greatest sources of pride is that I now have more time and resources to give back. In the last few years, I have been blessed to go on various voluntours and also be able to donate 3 schools for underprivileged children in developing countries. You can find out more about my Giving Back initiatives here.

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9 Money Principles That Can Make You Wealthy

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