Protecting your assets

• 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.

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.
  

Learn how to spend on the things that matter to you. 

Consider your values and priorities when you draw up your spending plan. If going on vacation or giving to a charity is important to you, include those items in your spending plan.

Pay down your high-interest debt as quickly as possible. 

While some types of low-interest or tax-deductible debt can help you along the way, high-interest debt rarely has a good purpose.

Earned income comes from what you "do for a living."

• Consider what you enjoy as you will be more likely to succeed financially.
• Consider what you're good at and see how you can use those talents to earn a living.
• Consider what will meet your financial expectations.
• Consider how to get there. Determine the education requirements, etc.

Evaluate your income situation annually.

To ensure that you save enough money, your wants should not exceed your budget.

• Track your spending for at least a month.
• Trim the fat. Break down your wants and needs.
• Adjust according to your changing needs.
• Build your cushion. Aim to save around three to six months' worth of living expenses.
• Contribute to a retirement fund and try to get the maximum your employer is matching.

You’ll only build wealth if you save a reasonable percentage of those earnings.

• If your employer offers a 401(k) plan, increase your contribution.
• Automatically send a portion of your money to your savings or investment accounts before you can spend it.
• Purchase a home instead of renting. You'll get your house payments back in the form of equity.
• Pay off anything you owe to avoid paying interest.
• Maximize the interest earned on your savings.

Periodically evaluate your spending and look for sources of savings.

• Invest in more sustainable technology for your home. For instance, if you watch cable, buy only the channels you are watching.
• Improve the insulation of your home to reduce the amount you are spending on electricity and gas.
• Consider buying in bulk.

• Productive assets are investments that internally throw off surplus money from some sort of activity. 

• Each type of productive asset has its own pros and cons, unique quirks, legal traditions, tax rules, and other relevant details.
• The three most common kinds of investments from productive assets are stocks, bonds, and real estate.

• It means investing in common stock, which is another way to describe business ownership or business equity.
• When you own equity (the value of the shares issued by a company) in a business, you are entitled to a share of the profit or losses generated by that company's operating activity.
• Equities are the most rewarding asset class for investors seeking to build wealth over time without using large amounts of leverage.

By making wealth your priority now, you could be both later. Establish a strong financial foundation that will give you financial security and peace of mind moving forward. 

Living paycheck to paycheck is a guaranteed way not to build wealth.

If you’re just starting on your personal finance journey, it might not be time for you to start acquiring these assets yet.

• Investing in stocks is simple if you avoid lucky stock picking. Keeping long-term perspective, invest early, especially in low-cost index funds.
• Rental properties.
• Small business ownership.
• Delaying gratifications.

You’ve probably heard that time is your greatest investing asset. It’s true. The more investments earn and grow on their own, the greater they become.

Investment value is also greatly impacted by the amount invested.

Bad investing advice can come from many quarters, such as wealth expos or financial advisors. If anyone promises you any type of return over 12%, 99% of the time, they are probably playing you.

There are great financial advisors out there, but many people who sell investment products just want your money. However, it's not that hard to invest for yourself.

1. Never buy a financial or investing product from someone you just met.
2. Getting returns over 12% per year is ridiculously hard. If it sounds too good to be true, it is.
3. If you don't understand it, don't invest in it.
4. If one of your friends recommends an investment that's making them a lot of money, they are probably suckers too. If you see the "results not typical" on any marketing materials, move on.
5. There are no "secrets of the super-wealthy" that anyone will sell you for $500 or that you can take advantage of unless you have hundreds of thousands of dollars.

Wealthy people have sustainable access to money, often for a very long period of time. Their habits are now aligned with the wealth that they have incurred.

Pseudo affluence, on the other hand, is what people experience when they are currently earning lots of money and start to believe that they are rich. They pay for their expensive lifestyle with a high amount of borrowed money and are just a job-loss away from being poor again.

... is a ‘state of excess’ when the stuff we own makes us poor, as the debt we incur has trapped us to keep working our jobs to fund the expensive lifestyle and habits.