10 things you can learn about money in 10 minutes that will change your life
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On Inc., Ilya Pozin wrote about 10 things anyone can learn in 10 minutes to make them more productive for the rest of their life.
More productive is one thing — but how about richer?
Only 10 minutes won't teach you everything there is to learn about managing your money and building wealth, but setting aside some time to learn one of these 10 things can only improve your financial know-how.
ShutterstockHow to calculate your net worth
Your net worth is the financial value of everything you own — it's something we should all know, yet tend to overlook.
As Business Insider's Sarah Schmalbruch writes,
A negative net worth — when you've spent more than you've earned — can be the wake up call you need to make some serious financial adjustments. A positive net worth, on the other hand — when you've earned more than you've spent — can be a confirmation that you're doing well, and can help you plot out how much longer you need to reach your next financial goals.
How exactly do you determine your net worth?
Certified financial planner Sophia Bera provides a simple equation in her book, "What You Should Have Learned About Money, But Never Did":
Your net worth = what you have — what you owe
Here's the exact method she uses:
I have a spreadsheet that I pull up, I log into my accounts online, and I enter the balance of each of my retirement accounts, savings, investments, and so on. Then I enter any debts and subtract this number from my assets to determine my net worth.
If you own a home you can pull the approximate value of your house on Zillow.com, and then subtract your mortgage balance to determine how much home equity you have.
How often should you revisit your net worth? Twice a year, Bera suggests.
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How to figure out where all of your money is going
Most of us know how much cash is flowing into our bank accounts each month — but just how much is flowing out? Do you know how much you spend eating out, on monthly subscriptions, or on coffee? Chances are it's more than you think.
If you redirect smaller, everyday expenses towards a retirement account, it can accumulate and grow into thousands of dollars over time, thanks to the power of compound interest.
Where can you cut back? First, you'll need to figure out where all of your money is going. There are plenty of apps out there that will automatically track and categorize your expenses for you, such as Mint, You Need a Budget, Personal Capital, and LearnVest.
If apps aren't for you, try keeping a spreadsheet on your computer or writing down your daily purchases in a notebook.
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How to change your mindset about money
Contrary to popular belief, finishing rich isn't necessarily dependent on the size of your paycheck — and it has more to do with psychology and mindset than you may think.
This should strike you as good news, since anyone can change their thoughts, beliefs, and habits to reflect those of the rich.
Start by thinking of money as something to invest, rather than something to save or spend. As self-made millionaire Grant Cardone writes on Entrepreneur:
The only reason to save money is to invest it. Put your saved money into secured, sacred (untouchable) accounts. Never use these accounts for anything, not even an emergency. This will force you to continue to follow step one (increase income). To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access.
Next, start making choices like the rich and developing "rich habits." As self-made millionaire T. Harv Eker says, "The fastest and easiest way to create wealth is to learn exactly how rich people, who are masters of money, play the game."
See the rest of the story at Business Insider