Be a financial black belt. How to manage your finances with a 21-step secret money paradigm to massive wealth. Personal Finance Wizard, Book 3, written by Tom Cromwell, narrated by Russell Newton. In retirement, the majority of Americans will have less than $15,000 per year to live on, plus their social security—and that assumes they plan on dying at the average age of 79—leaving nothing! If they expect to live longer and don't want to rely on their social security, then they will need to be even more frugal in retirement. That is a pretty frightening thought. This fact is based on the $224,000 median net worth of an American at age 64, with another 15 years until they reach the average life expectancy of hitting 79. I imagine faced with having to eke out a tiny pension for the rest of your life or keep working into your seventies that this is a scenario you are pretty desperate to avoid? It is probably one reason why you might be reading a book about managing your finances and developing wealth—so you are already ahead of the game.

Perhaps you recently became debt-free, or this is your ambition, and now you want to take the next step to financial freedom? Maybe you recently settled down and bought a house, now you have a mortgage but you also have some free income? Free income is the key ingredient to building wealth. We all know that. But what to do with it, and how to make the most of those opportunities that will arise ... well that’s just a bit harder. Maybe you have just started on your career, and you are venturing out into the jungle of the many financial products and services around? How do you make yourself wealthy—what are the next steps?

This book is written for everyone who wants to become more financially secure and is looking to build their wealth. We will illuminate the different types of investments and investment strategies, plus their risk and reward trade-offs. However, this information is a double-edged sword as without the right wealth-building mindset and the habits to go with it you could easily come unstuck. It is a solid gold fact that nobody became seriously rich without many of the traits and habits described in this book—unless they won the lottery. By reading this book and taking action, you stand a chance of becoming a financial black belt. By this, I mean that you could be in the top tier, the elite, the wealthy five percent of the population. I cannot promise that wealth will come overnight, but I can at least guarantee that you will be prepared and armed for what you need to do.

What is the alternative? ... That you get lost, follow many wrong paths and dead ends, while your money slips through your fingers like water as you try and fail to scoop it up because you have the wrong attitude and bad habits. The first thing you will achieve through our journey is to ensure you have a solid foundation for your wealth building. It stands to reason that without this foundation, what you are building can be unstable and come crashing down: perhaps you will take too many risks, or too few, or construct with bad materials. The second thing will be a practical knowledge of the pros and cons of different asset classes and investment strategies, and how these approaches should be in harmony with your personality, preferences, and circumstances. Don't know what a bond is? You will if you read this book.

The third, most valuable thing that we reveal will be a true wealth-building paradigm: a system of beliefs, ideas, values, and habits that is a way of thinking about the real world. This paradigm is used by the rich and super-rich to build their wealth. For evidence when we look at multi-billionaires Warren Buffett, Bill Gates, Jeff Bezos, Carl Icahn and Ray Dalio, they display all of the elements which we shall examine—as demonstrated by them in interviews, lectures and their writing. However, when we analyzed and surveyed the habits and traits of mere self-made millionaires, we only found a correlation of 5 or more of the elements displayed in 93% of the sample, and only a few (14%) showed them all. Maybe they are the billionaires of the future, who knows? Now there will be the critics who will say that correlation is not causation. I agree that it is not.

I don't think it is possible to evidence this. After all, the only way to make a million dollars is to go out and actually make three million (taxes!). However, ask yourself this: would you rather be sharing the same values, habits, and beliefs as those who have demonstrable wealth, or the critics and nay-sayers who almost certainly don't? I can put you on the right road to prosperity, but I can't make you travel down that road.To get to the end you have to take action. In this book, you will discover: · How to organize and manage your finances like the rich. · Why trying to find your passion is misdirecting you. · The secrets to unleashing your unconscious mind on your finances.

· How to avoid stupid and disastrous mistakes you could be about to make. · Why you should develop a healthy appetite for risk. · 8 Things to do every day to improve your life. · Which investment strategies and asset classes would suit you. · How to eliminate the bad habits that are keeping you poor. · Why cash flow is still king. · 21 Specific steps or actions to put you on the right road to wealth.

I have a wealth of personal and commercial finance experience and an upbringing that showed me the value of every penny earned. I have invested money from my earnings and ventures for 30 years, and I see myself as an example of how it is possible to rise to wealth and prosperity from a disadvantaged situation. I believe in financial empowerment for everyone because your goals were my goals. Working with young people, I realized many had an uncomfortable relationship with money even if they earned decent salaries. They were looking for guidance on how to manage and invest money, so I started to analyze what made people successful with money. Now I am enthusiastic and intent on helping a broader audience to reach financial prosperity. You may be in two minds as to whether to read this book?

The best way to determine if this book is for you is to ask yourself a few searching questions. Are your current habits serving you well? Are you living a life full of joy and happiness, filled with great friends, health and vitality? Are you accelerating towards a wealthy retirement or becalmed in a sea of doubt, inaction and procrastination? I promise if you put into action the 21 steps that we set out in this book, then you will be happier, wiser, and ultimately wealthier.However, it is important that you start your journey with me now because every day lost is a day wasted.The power of compounding works most strongly over longer periods of time. We cannot start five years ago, but we can start now. There is nothing in this book that cannot be put into action by the averagely intelligent adult. No special skills, training, or equipment is required.

Nothing is standing between you and the road to wealth; you only need to walk the path. The sooner you start, the sooner you will arrive! Deciding that you want to be wealthy is one of the easiest judgment calls you could make. It’s unconscious, and in today’s society, it’s the norm—not the exception. If your sights are set on the American Dream, with hopes of retiring to more than a meager existence, the hardest thing to do is start. As with any journey, you need to know what you’re doing and where you’re going before you can begin. Unfortunately, knowing what to do is where many Americans come unstuck.

Despite having the world’s largest economy, the U.S. ranks at No. 14 globally for financial literacy, and just 57% of our adult population has a good grasp of financial topics and principles. What is financial literacy ... you might ask? It really comes down to the basics, the kind of things you might set out to learn when you first decide that you want to get wealthy. In simple terms, financial literacy is knowledge about personal finances, money management and investing—but it’s also about understanding how each of these things applies to you and your life. Paying taxes, building assets, saving money and putting away for your retirement are such basic principles in our society, but they aren’t taught in school and so many Americans leave school without even an understanding of how debt works (which, by the way, is one of the main roadblocks on the journey to serious wealth). By learning the basics, you’ll have a solid foundation on which to start building your wealth.

Even with this knowledge, I can’t promise that there won’t be trips and stumbling blocks along the way, but if you get the fundamentals right, you’ll be equipped to handle whatever comes your way. Financial A 101 Our kids (myself included, many years ago) learn about how much money they could make by pursuing a good career, but they never learn how to put that money to work for them, or for that matter how to handle the many thousands of dollars in student loan debt they’ll accumulate at college. I was fortunate to find my way with finances, partly because my parents modeled the way for me.That is not to say they were rich—very far from it. They were naturally frugal and lived within their means.For example, eating out was not an option, my Mom always made sandwiches before we went out.She kept meticulous accounts, budgeted and was always looking for ways to save money, like buying in bulk. From these beginnings, I discovered the 7 rules of money, and now I want to share them with you.They didn’t come to me in a single flash of inspiration, and they are not all original, but when I reflect on my experience and how I came to be prosperous these rules are what is important. Remember those multi-billionaires I mentioned earlier? Buffet, Gates, Bezos—sure they all made their fortunes in different ways, but it’s their approach to money that’s really eye-opening. Each of these world-famous wealth magnates uses a playbook that’s so straightforward that anybody with a real desire to get rich could follow it. These rules are the cornerstones of wealth creation and I guarantee that if you follow them, you’ll be breaking ground on your own financially stable future.

Rule 1 – Pay Yourself First Paying yourself is a concept that sounds alien when you’re caught up in the typical way of doing things. Many Americans go through life waiting for their paycheck to roll in so they can settle their bills, buy some groceries and kick back with those extra few treats that they’ve been craving.However, this is probably the single biggest thing you can do right now that will end up making you wealthy, and this was the cornerstone of my approach. Everyone—and I mean everyone—intends to save money. We start the month or fortnight with a checking account that’s been topped up by our dependable, regular salary deposit and get to work paying our rent, credit card balance, and utility bills. With what’s left over, we buy some groceries and maybe eat out once in a while or pay for our hobbies. If there’s anything left over at the end of the month, it might find its way into savings—but that’s if you don’t feel like treating yourself. Despite our best intentions, putting money into savings just doesn’t come easily and gets put off time and time again.

What if I told you that you shouldn’t be prioritizing your bills, though? It sounds radical, but when this first rule clicked with me it changed my perception of money and started me down the road to wealth. According to the National Foundation for Credit Counseling (NFCC), more than 60% of Americans never budget. With low to medium wages and no oversight of how they’re spending, three-quarters of Americans live paycheck to paycheck, and there’s no doubt that the same three-quarters of Americans hope that they’ll win the Powerball or that they’ll simply get lucky with money someday. The sad truth is that barely anyone gets truly ‘lucky’ with money (and even fewer win the Powerball). That’s why if you want to see a difference in the way your finances work, you have to pay yourself first. When your paycheck rolls around, don’t start reading your mortgage balance or making a shopping list until you’ve put some of that money away—whether into your company 401k policy, a Roth IRA, or just a savings account.

You’ve earned it, so why default to paying others before you see any of the benefits yourself? If the first payment you make is to your own savings account, you’re setting yourself up to start building a base of wealth from the word go. It means that you’ll put money away for the future regardless of how much is left over at the end of the month—but perhaps, more importantly, it changes the way you look at the money you earn. Paying yourself first is a commitment to prioritizing your own finances and making a real difference to the way that you make, spend and save money. It might be the case that you start looking more critically at where your money is going, and can be a real catalyst for making changes to your living arrangements, spending habits and lifestyle. As a bonus, compared to other purchases you might make, paying yourself doesn’t involve losing any money—it’s all still yours, ready and waiting for a time when you can use it for something you will really value. If I were a gambling man though (and I’m not—in cards and casino games, the house really does always win), I’d wager that once you’ve come to understand the 7 rules of money, it just might be that you’ll want to use what you’ve earned to make more.

The cost of living is going up and when students graduate from college with over $100,000 in student loan debt, paying out of your own pocket suddenly seems a lot less achievable. This is where using debt wisely and sparingly comes into play, and just because you can get something on a finance deal doesn’t mean that you should.I use interest-free credit (debt) now as a tool, because I know that I have the discipline and funds to pay it off at the end of the interest-free period. One of the most important things to know about borrowing money is that not all debt is equal. Take a college education, for example. If you were asked to justify why you’d borrowed $100,000 to pay for your tuition, you might be able to respond by talking about all of the extra opportunities and earning potential you’ll benefit from if you can just get that degree. Now, try and do the same thing for a $99,000 Tesla (or any other car of your choice). Chances are that you might struggle to get past saying that it looks nice, or that it’s the car you’ve always wanted. In any case, a cheaper car would still do all of the same things—it just won’t act as a status symbol.

There’s nothing wrong with borrowing money for worthwhile things, but most of America’s nearly $14 trillion of household debt has been spent on cars, holidays and other things that won’t pay off in the future—even if they are enjoyable in the moment. Thankfully, there is a way to determine between ‘good’ and ‘bad’ debt, simply by paying attention to two important factors: •Interest—that is, the money that you pay to a lender on a regular basis for the privilege of using their money; and •Depreciation—which is the reduction in the value of an asset as time goes on. When you’re deciding whether borrowing money (and getting into debt) is the right thing for you to do, be sure to weigh these factors up to make certain that a loan or credit agreement makes good financial sense. Remember that because of these factors, borrowing to pay for something will cost much more than if you were to pay for it with your own money, as you’ll be charged extra for using somebody else’s resources. It’s how banks make a profit, and it’s the system that keeps so many people tied into a constant cycle of buy – repay – repeat. Taking our earlier example of cars and college, focusing on interest and depreciation shows us exactly why debt can be a double-edged sword. With a strong performance at school you could earn more, get better opportunities, and score more lucrative jobs that will ultimately see you raising your financial profile as the years go on.

This is appreciation, the opposite of depreciation and a major factor that you should consider when deciding whether to take on a new debt. You’ll still wind up paying interest on what you’ve borrowed, but when you’ve got an asset like a house or an education that could actually make you money, there’s every chance that it’s worth it. In direct contrast, assets like cars and computers don’t go up in value and won’t generally be a source of wealth creation (unless you’re a driver or a programmer). The moment that you drive a brand new car off the dealership forecourt, it loses thousands of dollars in resale value and that’s before you’ve even thought about maintenance, compulsory insurance premiums and the cost of gas. This is depreciation at its worst, and when you get into debt for the wrong things, you’ll be paying double—both by making repayments with interest and having an asset that is rapidly losing its value.It is true though that dealers will give you a better deal if you take finance because they make huge commissions from the finance companies, and they can use some of this to give that deal on your trade-in. You can exploit this by canceling the finance or paying it off immediately, but check there are no penalties for this and make sure you have the discipline. Aside from using debt sparingly, there is one higher goal that anybody truly serious about getting wealthy should aspire to—being debt-free.

The number one mistake that debtors make is treating borrowed money as if it’s their own. In reality, borrowed money is just another product which somebody else is profiting from whilst you’re paying the price. It should be treated like a hot potato, and paid off as soon as possible to limit the extra you’ll pay in interest on top of what you borrowed. The sooner you pay what you owe, the less you’ll pay overall. Break the cycle, reclaim your financial freedom, and reap the benefits. Rule 3 – Live Below Your Means Do you end each month with no money? Do you buy things that you can’t afford just to keep up with other people?

Of course, going from overspending to staying within your earnings bracket requires some lifestyle changes, but there are ways that you can cut down on your spending without totally forgoing life’s pleasures. To help you move past overspending and living beyond your means, I want to share two of the tips that made life so much easier for me when I was in your position—budgeting, and taking every opportunity to automate your finances. Budgeting With The 20/30/50 Method Formulating and sticking to a budget are essential steps in cutting out unnecessary spending and starting to take control of your finances. People generally understand that budgeting involves working out how much you earn, how much you spend and how much you save—but to do it effectively, you need to go beyond just tracking your money. For me, the reason why budgeting is so important is that it makes you accountable. When you have a set of guidelines to follow, it’s much easier to cut out unnecessary spending and stay on track because you can clearly monitor your progress and see when things are going wrong. Beyond that, following a budget will help to keep you out of debt, and allow you to work towards paying off any already existing debt.

By mapping out your after-tax earnings and regular spending on everything from bills and rent to entertainment, you can build up a picture of your own wealth and can decide what’s genuinely affordable for you. There are endless strategies for creating a budget, but as long as you’re realistic and include all income and regular spending, it’s hard to go wrong. What’s more difficult perhaps is knowing what to do with those surplus dollars you have left over. Of course, you want to make the most of it, and this is where the 20/30/50 method comes into play. The basic principle behind the 20/30/50 method is that you can allocate your income in an effective and consistent way by apportioning it into savings, wants, and needs. It works by taking your post-tax income and dividing it up with 20% going straight into savings, 30% getting allocated to the things you want, and the remaining 50% paying for the absolute necessities such as housing, utilities, food, transportation and minimum debt payments. You might also hear this method called the 50/30/20 rule, but remember that you’re paying yourself first, and so the 20% you allocate to savings should take precedence.

If your spending goes beyond the allocated proportion in any category but saving, it’s time to make a change to get yourself back on track—after all, these figures are limits, not targets. Remember these are guidelines, and your circumstances may mean you want to flex them a little or even a lot.If you can’t save 20% then save what you can, if you can save more then it is wise to do so.The secret to getting this right is to be honest and strict with yourself and try to align the split with your financial goals.This means keeping the 50% essentials allocation to things you genuinely do need and not letting it slip into so-called ‘must-haves’ like streaming services, dining at restaurants, or buying takeout coffee. When it comes to saving or investing 20% of your net income, the world really is your oyster provided that you’re sensible with the money. Topping up an emergency fund, making IRA contributions or investing in funds are all perfectly valid uses of this share of your income—and remember that this budgeting category can also be used to pay down debt more quickly beyond the minimum payments which should be included as essential costs.As already mentioned, this must align with your goals. If you want to retire at forty then you are going to have to save and invest more than 20%.If you have children, a mortgage and restricted income then20% will be a stretch—but save what you can. In all, the 20/30/50 budgeting model is a truly valuable tool that can help you to live within or even below your means. One of the most common misconceptions about budgeting is that you have to give up the things you enjoy to save money—but by using this method you will cover the essentials, make an investment in yourself by saving, and still have money left over to go on holiday, eat at great restaurants and pay for Netflix. Automate Everything Let me guess, even though you want to get rich, you find dealing with your finances boring?

Me too. As with any life admin, it’s the small and monotonous things that often get forgotten or put off until another day (forever). The problem with this is that these small things facilitate you getting wealthy. You can’t make investments without having money in the right account, and you can’t save for retirement effectively without setting up an individual retirement account (IRA) or a 401k policy. Enter automation, a digital-era trick that will force you to make the best financial decisions without lifting a finger. When you’ve got an automated system in place to handle your money, you can focus on more important things like earning more or deciding where to invest it. If you do it right, you can expect: •All of your money to automatically reach the right accounts.

•Your bills to be paid on time, every time. •Your debts to be settled as they fall due. •Investments to be made on your behalf without using up your valuable time. Sounds good, right? The best part about automating your finances is that it requires minimum effort for making money management so much more convenient. You can get started by signing up for automatic salary deductions into your employer retirement account or 401k, with the remainder of your paycheck being deposited directly into your checking account. With the bulk of your paycheck still intact, you can set up automatic recurring transfers into your savings and investment accounts so that you’re paying yourself before you even get the chance to spend those hard-earned dollars.

Next up, either sign up for automatic debits or use your credit card for recurring monthly spending. Your phone bill, utilities, gym memberships—these are things that cost the same every month and need paying on time. Get these paid automatically (so you never miss a beat) and then get your balance back to zero. You’re using credit wisely, and you’re not getting into debt. Finally, use a feature that lots of banks have these days—bill pay. This is a checking account feature for bills that require a cheque, for instance, your rent. Your bank will automatically cut a cheque and mail it to your landlord (or whoever else you’re paying) leaving you with nothing left to do but read the confirmation email that’s sent to your inbox.

It all sounds so simple, and that’s because it is. I can’t recommend automating your finances enough because it fixes the fundamentals of money in place, leaving you with all the time in the world to either earn more or enjoy life—all whilst staying within your budget and sticking to your goals. Your money’s on autopilot, and that’s a good thing when it comes to budgeting. From the Americans who have full designer wardrobes but empty savings accounts to those who are tired of the ritualistic bill-paying sessions they hold each month, it’s not hard to understand why managing money often feels like a chore. It’s important to realize, though, that the things holding us back are usually minor habits and ineffective practices, where just a small change could make all the difference. Rule 4 – Saving Will Never Make Your Rich The first stop for most people who want to build wealth is saving, often relentlessly. If that’s you, well done—but you should also take a moment to stop and think about whether saving is the most effective use of your money (spoiler: it’s not).

That’s the danger of inflation, and right now it’s eroding the value of your savings. The bank might seem like the safest place for your money, but if you want to hold or even exceed its original value, you need to put it to work. This is where investing comes into the equation. The world’s wealthiest people don’t just sit on their cash, and instead are constantly trying to find investments to beat inflation. From businesses and properties to stocks and shares—what you invest in matters less than the fact that your money is out in the market where there is every chance it can make you those extra dollars. When confronted with this knowledge, people often withdraw and comment on how risky investing can be—but what could be riskier than leaving your money to sit in an account whilst a whole economy plays out around you? With the right knowledge and strategy, investing is the centerpiece of wealth creation and saving just can’t compete.

There is no right answer to questions like that, but if you want to be as comfortable as possible whilst riding out a storm, you need to have some liquid assets on hand to tide you over. This means that building up an emergency fund is vital, and you can start by setting a savings goal that would cover three to six months’ worth of essential costs should the worst come to the worst. An emergency savings fund is a tool to handle uncertainty, and having one will make life a damn sight more comfortable as you continue on your journey to wealth. Rule 6 – Knowledge Is Power (Money) This is a simple rule, but an important one nonetheless. In finance, just like with many other things, there is a direct correlation between how much you know and how well you perform. That isn’t to say that you need to be super smart to get wealthy (I’m certainly not), but you do need to get informed. Just as with previous rules, we can take our lead here from moguls like Warren Buffet and Bill Gates—billionaires who are known for their commitment to learning and to whom education is viewed as an investment in itself.

The more you learn, the more you earn. It’s a simple motto to live by, and one that you can start at any time just by surfing the internet and reading the cornucopia of guides and tutorials that are available for free. Self-development books of all kinds can also be helpful, but even just reading the news and getting well acquainted with market trends will leave you in a better position to make informed financial decisions. There’s no escaping from the fact that lots of financial strategies take time to implement, but you’ll be pleased to know that just by reading this book you’re increasing your knowledge and, by extension, your earning potential. Rule 7 – Eliminate Your Bad Money Habits Even with a solid, automated budget in place, it’s impossible to escape from the fact that you’ll be working with limited resources. Despite best intentions, it’s all too easy to handle your money badly by developing habits that are really a form of self-sabotage. You’ll probably have heard the phrase “work smart, not hard,” and by eliminating your worst financial habits you’ll be doing exactly that. If you’re serious about making a real difference to your life and becoming wealthy, removing these toxic traits will help you reach your goals and then some.

•Stop keeping up with friends who have expensive tastes This is perhaps the hardest one to learn, because we all want to endear ourselves to our friends and nobody feels good about ducking out of that expensive drinks party or celebratory dinner. What most people don’t realize, though, is that it’s okay to be authentic with friends who have bigger budgets than you. If something’s too expensive or would cripple your budget—say so—and they should understand that you’re working towards your financial goals rather than just blowing off plans. The quickest way to burn through a budget (and a pocket) is to live like you’re rich when you aren’t. When you’re tempted to buy that new phone, car, dress, holiday or whatever else, just take a moment to reflect on reality. Many of the amazing, luxurious lifestyles that you see on social media are an illusion and getting sucked in won’t help you to get wealthy ... it’ll just leave you in debt. •Don’t pay too much in taxes Nothing’s certain in life, except death and taxes.

Another Franklin quote, I know, but one that rings true whether you’re born with a silver spoon in your mouth or strive to climb up the money ladder later in life. You won’t be surprised to hear that the average earning American pays over $350,000 in taxes over their lifetime—so it makes sense that you’d want to minimize that liability. The problem is, many tax loopholes and clever structuring schemes are reserved for the ultra-rich. Fortunately, one of the best ways to reduce your tax liability has been staring you in the face all this time—your employer retirement plan or 401k. These accounts provide a way to directly reduce your taxable income, and the same is true of a health savings account (HSA), IRA, or Roth IRA. All of these investment accounts will shelter your income from taxes, so there’s simply no excuse for paying more when you can instead put the money aside for your future. •Don’t wait until you have more money to invest A lot of the strategies, tips and tricks that we’ll go on to cover relate to investing—but before you can start strategizing on the best ways of making your money work you need to understand why investing is so important.

If you aren’t already putting some of your income towards investing, then you need to start now. The reason for this is compound interest, which works best over a longer period of time. This is the money that you earn for reinvesting the interest generated by your original investment. Working as a cash builder, the longer you leave your interest to do its thing, the more money you’ll earn. It’s easy to think that you’ll start investing when you have more money, but why wait. The longer you postpone investing, the less impact it has and as I’ve said before, the sooner you start, the sooner you’ll arrive. •Stop making impulse purchases Impulse purchases are the downfall of a well-planned budget, yet they’re a trap that many people fall into.

Impulse buying is all about emotion, which is exactly what marketers and retailers play on when trying to convince you to make a purchase. Impulse shoppers will see a sale or an offer and know that they must get the item without a second thought—to hell with the budget. It used to be that when you hit zero on your checking account, you had to stop spending. With credit, you can keep going right the way to debt and beyond as far as bankruptcy. The key to breaking this cycle? Stop that impulse buying. Stop spending money on things that you don’t need and can’t afford—and then pay off what you owe.

If you see an item on sale or want to buy the latest phone as soon as it’s released, wait. I’d guess that for 9 out of 10 possible purchases, you’ll feel differently about it after a few days or even just hours. Consumerism doesn’t have to be a race, and treating it as such is one of the quickest routes to financial ruin. Wanting to get rich may be the default, but few people take action to make it a reality. They might not seem like much, but these principles are the building blocks of wealth, and by following the 7 rules of money you’ll be well on your way to financial success. Building A Foundation – The First Steps To Financial Success Anybody setting out to accumulate significant wealth will undoubtedly wish to become extremely proficient within the financial world. Trading on the stock market, investing in property, and making real money are just within touching distance. To make it, though, you need a solid foundation—a basis on which to build your wealth.

To that end, follow these steps to begin strengthening your own position: Step 1: Follow the 20/30/50 method. Divide your own income by what you absolutely need to spend (50%), what you want (30%), and what you can therefore afford to save or invest (20%). With this framework in place, your subconscious will get to work on molding your habits. It may take some lifestyle changes, but there can be no getting away from the effectiveness of this method. Step 2: Set up automation, so that your money manages itself. Whether it’s direct contributions into your 401k, or money that’s automatically remitted to your landlord—make it easy for yourself. It will be so much easier to dedicate yourself to the harder things that actually make you money when the small, everyday tasks are handled without any effort whatsoever.

Step 3: Understand your own debt. Conduct an ‘audit’ of your own financial position to understand where your strengths and weaknesses lie. Debt is the number one factor that prevents people from becoming wealthy, and understanding what you owe is the only way to start paying it off effectively. Do not let debt be your downfall. Step 4: Start an emergency savings fund right now. You never know when you’ll need to rely on this money, and having it there will give you the financial security to know you can survive come what may. Failing to save for an emergency can lead to a spiral of bad debt as you borrow to overcome life’s various hardships.