Become A Money Magnet | 5 Signs You Will Be RICH


Do you want to be wealthy when you get older? Would you want to have so much money that
you’d actually have to put forth some effort to spend what you’re making? Of course, you would, so would I! It would be great to have not only enough
money for ourselves but a little bit extra to go around. We could be giving to others who are in need,
extending a vacation a little bit longer or just providing an even better life for our
family. The real question is will you ever have the
money to do any of that? In my opinion, the answer depends on a few
factors. I believe that just about anyone can learn
to manage their money in such a way that they have enough for themselves and a little bit
left for others. I also believe that there are signs that are
common amongst those who have achieved that level of wealth. Today I’m going to be going over five of those
signs. If you haven’t already, be sure to like
this video and let me know which of these signs you have and which you would want to
work on the most. Let’s get started. The first sign that you are going to be rich
someday is that you know yourself well and you don’t get in your own way. Within this sign, there are several traits
that you may want to consider developing if you haven’t already in order to get the most
out of it. One of those traits is automating your finances. Automating your finances can help make sure
that you do not become your own worst enemy. Impulse buys are a thing after all and we
all have weak moments. There’s not a whole heck of a lot that can
be done to totally get around that, but it can be limited. We can ensure those moments don’t cripple
us for years by having the key portions of our financial picture taken care of automatically. A second trait that is common to this sign
is a high level of self-awareness. It’s important to learn how you’ll react
to certain situations. Without that knowledge, you can’t set up
measures to ensure you don’t fail financially. Ask yourself: how will you react if you’re
investments fall by 50%? Will you be comfortable with continuing to
invest? Will you sell those investments and buy new
ones? Will you invest more to take advantage of
the price drop? Knowing the answers to these questions is
crucial to long-term financial success. A third trait that is common to this sign
is putting a high value on taking action. This one is pretty simple, no success has
ever been achieved without action. Therefore, knowing how to get yourself to
take the necessary actions to achieve your goals is vitally important. A fourth trait common to this sign is that
you know how to form good habits. If you want to learn more about how to do
this I highly recommend Gretchen Rubin’s book “Better Than Before.” It goes over how to form good habits (and
get rid of bad ones) for various types of people. I just finished it reading it earlier this
year, it’s a fantastic book. The second sign that you are going to be rich
someday is that you value ongoing education. Whether in the form of books, classes, or
just watching videos here on YouTube it’s important to never stop learning. Being open to these opportunities can lead
you to discover new ideas that you never would’ve considered on your own. And you never know when one of those ideas
will change your life for the better. The third sign that you are going to be rich
someday is that you have a high savings rate. You can achieve this in so many different
ways that it’d be impossible to list them all but here are a few examples:
You implement a zero-sum or values-based budget to limit financial waste. You use IRA/401K for tax savings. You hack major line items in your budget such
as housing and transportation for large savings. You follow the Jay Leno savings method. You diversify your revenue streams with a
side hustle and save the additional income. Whichever route(s) you choose to go with the
key is to get that savings rate as high as you reasonably can without being unsustainable. The fourth sign that you are going to be rich
someday is that your money works for you instead of the other way around. This is typically achieved through learning
the difference between assets and liabilities. Then buy as many assets (and as few liabilities)
as possible. For the record, I’m defining an asset as anything
that puts money into your pocket and a liability as anything that takes money out of your pocket. These definitions are based on the definitions
laid out in Robert Kiyosaki’s book, “Rich Dad Poor Dad.” Learning how to develop passive income streams
through investments or profitable businesses are some common examples. While they do have expenses associated with
them their net effect puts money in your pocket. However, some liabilities are almost unavoidable
in this day and age. For those liabilities, you should try to find
a way to turn them into assets. For example, shelter is something we all need. But in most cases, houses are liabilities
because they take money out of your pocket each and every month through the mortgage,
utilities, taxes, and insurance costs. To turn this into an asset you have a few
options. First, you can rent out some of your unused
space to make up for the costs of housing. Another thing that you can do is put your
house up on places like Airbnb to attract additional, albeit intermittent, income. Say that John’s house cost him $1,000 a month. He rented out his upper floor for $800 a month
and allowed people to stay in his lower level on the weekends through Airbnb. If this brought him an additional $400 a month
is total income would be $1,200 a month. At that point, he would be netting $200 a
month in income from his house and would have successfully turned it from a liability into
an asset. You may be able to achieve similar results
with your car by signing up for services like Uber or Lyft and making money as a driver. The fifth sign that you are going to be rich
someday is that you have a low burn rate. Your burn rate (at least in the context of
this video) refers to the amount of money that you won’t avoid spending. This mainly refers to your non-discretionary
spending. Most of us are going to need to spend some
money to have a place to live. However, the choice of what categories those
living expenses are going to is ours to make. We could pay rent, have a mortgage, or just
pay maintenance and property taxes on a home we own outright. We could also rent hack in one form or another. All of these options are going to have different
burn rates associated with them. John and Jane take home $5,000 a month. They rent an apartment in LA for $3,000 a
month. And their other non-discretionary expenses
amount to $1,500 a month. Therefore, they have a total personal burn
rate of $4,500 a month. And there’s $500 a month left to put towards
savings and other discretionary expenses. If John and Jane save the entire $500 each
month then their total expenses (and burn rate) would be $4,500 a month. This is highly unusual and likely unsustainable,
but we’ll do it like this just to keep the example simple. This would mean that John and Jane need a
nest egg of $1,350,000 to be considered financially independent according to the 4% rule. If they averaged returns of 8% per year on
their investments they would reach that goal in about 38 years. However, renting isn’t John and Jane’s
only choice when it comes to housing costs. What if they bought a house and paid a mortgage
instead? Assuming they had a $350,000 30-year mortgage
at 4% interest they’re payments would be $1,670 a month. However, as homeowners that wouldn’t be
their only expense. They’d also have to pay for property taxes,
homeowners insurance, utilities, and maintenance. Let’s say these costs amount to an additional
$830. Therefore, the average total cost of the house
would be approximately $2,500. John and Jane’s total monthly expenses would
be $4,000 after adding in their other non-discretionary expenses. Their goal for achieving financial independence
under this lifestyle is $1,200,000. This time they have $1,000 a month to save. Assuming an average 8% return they’ll be
financially independent in just over 28 years. That’s about 10 years sooner than before! However, John and Jane could still do more
to improve their financial situation. If they were so willing they could rent out
their house on places like Airbnb one or two weekends a month for some extra cash. They could use that cash to pay off their
mortgage and lower their burn rate or invest. If John and Jane net $100 a night from their
Airbnb house hacking strategy for two weekends a month they will net $400 a month. If instead of investing, they put the full
$1,400 ($1,000 leftover after expenses + rental income) toward their mortgage they would have
a paid-for home in 12 years. There’s a couple of things that happen in
this scenario. First, their burn rate drops because they
no longer have a mortgage. Their new burn rate is $2,330 a month. This means they need $699,000 to be considered
financially independent according to the 4% rule. Additionally, they’ll be capable of investing
$3,070 a month ($1,400 a month plus the $1,670 that used to go toward the mortgage). Under this scenario, John and Jane would be
financially independent 12 years after their mortgage is gone. If John and Jane add the $400 rental income
to their other investments they will become financially independent in 25 years. They would have about $1.28 million in their
nest egg and a mortgage of about $91,000. So those are five signs that suggest you will
be rich. While there are many other signs that could’ve
made this list I felt these were the most common that I see. Feel free to let me know which signs you think
should be added to the list in the comments below and let’s get this discussion going.

15 thoughts on “Become A Money Magnet | 5 Signs You Will Be RICH

  • People in need will always be in need . Its just like the sign (don't feed the animals). People that wan't to help can use time to make people in need more miserable. 50% will accept being more miserable no mather what and the other rock bottom people will get motivated to climb out and realize nobody can dictate there faith and take control. The up side your work to help people that will not help themself will not be waisted.

  • I'm so frugal, I'm currently at 70% savings rate. Goal is to achieve freedom and retire at age 40. I'm so tired of being employee, I wanna get out of the rat race asap.

  • good info, but i disagree with the idea that uber turns a car into an asset. Driving for uber is an active task, not passive income. Yeah you are using your car, but the main driving force behind the income is your own effort. Something like Turo would be a better example, similar to AirBnB as you just give someone your car on the weekend for a couple hundred bucks without you doing anything more than maybe delivering the car.

  • Not to be that guy but I notice you don't factor in kids. Also depending on a person's house Airbnb may not even work

  • 1. You don’t get into your own way-
    Automate finances
    High self awareness
    You value taking action
    Form good habits
    2. Always learning
    3. High SavingsRate
    4. Your Money works for you!
    5. Very Low Burn Rate
    (Low monthly expenses!)

Leave a Reply

Your email address will not be published. Required fields are marked *