One of the biggest ways to developing a money making mindset for success in life is being able to manage money. Being good with money can unlock so many doors for you. It can help you earn financial independence. It can allow you to be generous with your money, donating to charity. If you have enough, you can give it to friends and family for whatever they need.
But while being good with money isn’t easy, it is relatively simple. There are some time-tested best practices you can follow to help you manage your money effectively. It involves developing a set of skills and a mindset. Here are seven ways to developing a money making mindset.
Live below your means
Most of the free world knows who Warren Buffett is. He’s one of the world’s richest people, and he’s renowned for his financial success and acumen. Someone like Buffett could afford the biggest mansion ever made. But that’s not what he owns or where he lives.
No, Buffett lives in a modest five-bedroom, 2.5 bathroom property in Omaha, Nebraska. It’s the same one he bought and moved into in 1958. It’s all part of Buffett’s money making mindset. His spending habits didn’t change as his wealth increased, and neither should yours. Don’t buy things you don’t need. If you get a raise, don’t take this as an opportunity to spend more money. Instead, focus on saving or investing the difference.
Explore ways to increase your income
It’s great to save a lot of money as a way to build your nest egg. You absolutely should do this. But in order to be truly financially successful to where you’re approaching financial independence, you’ll want to optimize your income. This isn’t to say you should be greedy – but there’s nothing morally wrong with trying to get the highest salary you can or finding out where you can bring value to someone that will pay you for a product or service.
There are a few ways to do up your income significantly:
- Negotiate a raise at work. Prepare a market assessment for your position based on your location. In your report, include your major accomplishments with hard data on the value you bring to your company. Based on your performance as well as salaries for comparable positions in your area, ask your supervisor for a raise (if you’re worth it!).
- Get a new job. If you think you’re worth more than what your current employer is willing to offer you, pursue other positions in your area with slightly more responsibilities or expertise needed. Switching jobs is a fantastic way to increase your earning potential. If you do it too often you may have trouble finding a new position or building any kind of career stability, but it’s certainly a good way to get a better salary.
- Look for additional ways to earn income. Some refer to this as a “side hustle.” With the emergence of the internet, there have never been more ways to turn your hobbies into a new revenue stream for you. If you like writing, you can self-publish novels and sell them on Amazon. If you like blogging, you can create an affiliate site and review products. Or you can do freelance consulting work on sites like UpWork or Fiverr. You’re only limited by your imagination. There’s no reason you can’t dedicate your nights and weekends to looking for a new way to increase your income.
You may have to get creative, but there’s never been a better time in history to maximize your earning potential.
Don’t go into debt
This is a big one. Debt of almost any kind is deadly to being financially successful. It’s one thing to get a mortgage on a house. It’s another thing to splurge on purchases you don’t really need like a television or motorcycle. If you ever consider going into debt for a non-emergency reason, ask yourself before you do: “Will I really need this three to six months from now? Or will I be better off saving the money?”
Plan your budget
When it comes to budgets, financial guru Dave Ramsey said it best: “A budget is telling your money where to go instead of wondering where it went.” The most financially successful people have a plan for their money. Each month, you should forecast your expenses. Include all major categories including:
- Savings (retirement and non-retirement)
Your budget may vary depending on your specific spending habits, but review it each month. See how your forecast compared to your actual spending. If something is off, adjust it each month.
Don’t expect to get back the money you lend
This is a difficult concept for some people to master, but if your friends or relatives are in dire need of money and you lend it to them, you can’t count on getting it back. Consider it a gift, and if you’re not able to part with that money, be honest. If the person asking is a true friend or beloved family member, they’ll understand.
Only pay for luxuries that will help you be more productive
There are two types of “luxury” expenses: ones that give you a product or experience, and ones that provide a service. Overspending on products can be dangerous – buying cars or appliances you don’t need can quickly add up, weighing on your wallet. But spending on services can often have a multiplying effect on your productivity – and, in turn, your income.
Here’s an example. Say you’re a freelancer. You need to work as hard as possible for as many hours as possible to get maximum returns on your work. But it’s hard to do this when routine tasks like household chores get in the way. If you purchase the services of a housekeeper, you’re saving yourself time. You’re freeing yourself up to focus more on the work that can help you become a higher earner.
Or to tie it to your productivity more directly, imagine you’re a busy professional with an ever-growing to-do list. Opting for the services of a virtual assistant can make your life a whole lot easier. You’ll perform better at your job and have more of a chance to earn more or get a promotion.
When you spend money, make sure it’s on something that helps position you better for professional success.
Try not to beat yourself up when you stumble
This might be the hardest tip of all. You’ll no doubt make mistakes and occasionally slip. You may splurge from time to time, or find your budget not being aligned with your spending one month or another. Don’t fill your mind with negative thoughts about your spending habits. Simply understand that you made a mistake and resolve to learn from it going forward.
Being successful with money is all about developing a money making mindset. By following the tips outlined above, you’ll be well on your way to developing that mindset.