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5 Money Rules That Will Increase Your Net Worth - Darius Foroux

Personal debt destroys your net worth like nothing else

We must be wise about taking on debt. Like investing, there are rules to it. One thing is sure: Never borrow money to buy a car, electronics, or anything else that goes down in value. But when it comes to more complex things like growing/starting a business, investing in real estate, or even your education, think carefully before you go into debt.

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5 Money Rules That Will Increase Your Net Worth - Darius Foroux

5 Money Rules That Will Increase Your Net Worth - Darius Foroux

https://dariusforoux.com/increase-your-net-worth/

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Key Ideas

Money rules to increase your net worth

  1. Don't spend all your income at once: the easiest way to grow your bank account is NOT to spend it all.
  2. Know how the Economy works.
  3. Avoid debt; personal debt destroys your net worth like nothing else.
  4. Save as much as you can: find the figures that make you feel comfortable

It takes more time to make money than to spend it

You work thousands of hours to make a certain amount of money. And then, you can drop it all on a new car, luxury vacation, watch, or anything else that you desire.The easiest way to grow your bank account is NOT to spend it all. It’s solid advice. The ancient Stoics knew about this too. True freedom means you desire less.

Know How The Economy Works

Why do economies generally collapse? What’s debt? Who prints money? Why do they print money?You don’t have to be an economist. The point is that basic knowledge about how all this stuff works prevents panic. “Oh shit! The market is down! What now!!” Panicking will not help you.

Personal debt destroys your net worth like nothing else

We must be wise about taking on debt. Like investing, there are rules to it. One thing is sure: Never borrow money to buy a car, electronics, or anything else that goes down in value. But when it comes to more complex things like growing/starting a business, investing in real estate, or even your education, think carefully before you go into debt.

Direct your actions toward generating value

Can you generate value? If the answer is no, then make it your first priority turn that into a yes. Figure out how successful people are rewarded. Read books, study investors, try things out, talk to wealthy people, etc. You want to generate value—either by working for it or investing. 

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Financial planning

 ...is the process which provides you a framework for achieving your life goals in a systematic and planned way by avoiding shocks and surprises.

Try making a budget

  • Create a full inventory of expenses in front of you: Categorize them into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.
  • You can create a hierarchy of needs and decide which one’s to address first. It’s all about prioritizing. 
  • Accept that you have limited resources and unlimited wants. But you have to manage your resources. The sooner you accept this fact, the better you can control your impulses towards avoidable expenditures.

Maintain a personal balance sheet

It’s a statement wherein you can jot down your assets and liabilities.

  • Pull together your bank statements and other proofs of the liabilities
  • List down your assets like the bank balance, all investments, home value, and value of other assets.
  • Take a sum of all the assets to arrive at the total value of your assets.
  • List down your liabilities the (car loan, home loan, credit card balances etc.)
  • The sum of all the liabilities will show the value of the money you owe.
  • When you subtract the value of liabilities from assets, you get your Net Worth.

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The Golden Rules of Personal Finance

  • Spend less money than you earn
  • Always plan for the future: you should always look forward beyond the current month
  • Make your mon...