Many young people, if not everyone, want financial freedom. We usually crave to live in financial comfort and a stable state.
At one point in our lives, we dream of living a lavish life, have everything at our disposal, buy anything we want, and live a luxurious and premium lifestyle.
As much as we look up to all these, most young people forget that becoming rich in most cases involves a lot of hard work, time, and patience.
It’s important to admit that becoming rich takes time and effort.
For young people in their 20s, 30s and or 40s, you are never too young to set a course for wealth and success.
You are at a time in your life where it is important to learn how to earn and manage your own money.
Whether you are just getting started into your career or working toward your next opportunity or chance, now is the time to start making your financial journey and vision a reality.
Not all of us can get lucky and win the lottery or inherit a fortune from a mysterious rich relative.
We can set our own course for wealth and success. It sometimes looks hard to know where to start from in your life changing journey to riches.
But instead of daydreaming about that six-figure income, below are the 3 Stages of Money Journey that you need to master if you want to get rich.
It doesn’t matter where you currently are in your financial life. Maybe you are just starting out or already making good money.
Mastering these 5 steps can help you lay the groundwork in your 20s, 30s and or 40s for an overflowing bank account in your adult age.
Stage 1. Making money
If you are thinking of getting wealthy, there is an important money psychology that you need to get right.
If you study Freud’s model of the mind, you will discover something called Psychic Apparatus. It is the three-part construct in your mind that controls all your behavior.
The three-part constructs are the id, the super-ego, and the ego.
If you want to become rich, the fast thing that you need to do as a young person is to focus on making career and life decisions that will help you make more money.
There are so many ways for you to make money in your 20s or 30s, even without having a “job”. But on the flip side there are also countless benefits to having a steady job as a young person.
Finding different approaches to increase your earnings and bring in more money is quintessential to becoming rich.
Truth be told. You will never become rich on a single income. If your mission in life is to become wealthy, you need to build multiple income streams.
This can include a side hustle (doing something that you love) or a second or part-time job.
There are so many ways to make money right away. You can search this online and see what works for you best.
While a search online will produce millions of strategies, not all strategies will be legit. It’s up to you to filter through the so-called noise.
Stage 2. Saving money
The most important decision you can make as a young person is to get into the habit of saving part of your income regularly.
Making money after landing a job, starting a side hustle or a business is half the battle of becoming rich. Figuring out how to use extra cash is what determines your fate.
Using your extra money carefully will help increase your net worth and your life’s worth over time.
Saving money is one of the best financial habits you can adopt as a young person.
If you have accrued some extra cash after paying off all your expenses, it’s very important to park your extra money in a safe place for future use.
Saving money is important because it gives you freedom, provides you with security and Relieves you Stress and Anxiety.
Additionally, saving money can help you pay for large purchases.
While there are countless reasons to save your hard-earned money, you just need to find a reason that resonates with you. take some time to outline what you want your money to do for you.
Parking your money in the wrong places can hold you back, prevent you from reaching your financial goals and even force you into a late retirement.
There are several places to save your extra money, and the best fit comes down to your financial goals.
Below are some of the places where you can park your spare cash:
-
Checking account. -
High-yield savings account. -
Money market account. -
Certificate of deposit (CD) -
Retirement account.
Money market funds, savings accounts, and short-term CDs can all provide safety and liquidity for your idle cash.
Although keeping money in a savings account appears safe, the interest you will earn is not enough to keep up with inflation over many decades.
But remember, saving money takes discipline and a certain amount of sacrifice.
Stage 3. Investing money
Learning how to invest the money you save is extremely important if you want to secure your future and build wealth over time.
When you are starting to invest for the first time, you should have a sufficient amount of cash sitting in an emergency fund to cover at least 3 to 6 months of living expenses.
Emergency fund gives you a cash cushion should you either lose your job or be hit by an unexpected expense to sort out urgently.
Investing for the first time can feel intimidating, but it’s not nearly as scary as you might think.
As a young person your greatest financial asset is time. If not, all your investments should be invested on growth-oriented assets.
At this point in your life, your primary investment objective for your long-term investing should be growth. This is because you can take advantage of compounding.
The younger you are, the better chances you have of building a wealthy and thriving future for yourself.
When figuring out where to invest your money, there are not only thousands of products and services to choose from.
There are almost as many different firms and vendors available who are trying to convince people to invest with them.
Because of income limits, it’s not likely that you will be able to spread your cash into all investments available, you should just pick at least two or three and steadily fund each.
Investing works best when it’s done early in life. This will let you grow your money, giving you more options in the future.
Key takeaway
Before you start investing for beginners, it’s very important to have the rest of your financial house in order.
Step one of becoming financially successful is to actually create a vision for yourself financially.
It’s just fine if you don’t know exactly what you want right now with your money. Everyone must start somewhere, and if you work at it, your financial situation is likely to improve over time.
Making more and continually growing as a person are all goals that will push you in the right direction.
When you master the rules when still young, this will give you a head start when you reach adulthood.
You will be getting a big jump on where your money should be when you are an adult