Money surely can’t buy us love and happiness. However, it surely elevates our quality of life and gives us security. In most cases, money is able to give us peace of mind for our future and our loved ones’. If you’re here to find ways to build your wealth, you’re already on the right path. In this article, we will discuss what wealth creation is and how you can apply it to your own financial life. We will also tackle some real concrete ways to wealth creation.
What is wealth creation?
Wealth creation is the process of wealth accumulation through various revenue streams.
It is different from getting a job and a regular income or salary.
Creating wealth is more about growing your wealth and sustaining it throughout the years.
It is not an easy task.
Most of the time, a person needs to educate himself extensively to create his wealth.
Moreover, it doesn’t happen overnight, either.
Wealth creation requires a lot of time, effort, dedication, and discipline.
Maintaining your wealth isn’t all that easy, either.
How is wealth created?
Gaining wealth is owning things that have value.
It is also the ability to convert something into another that has more value to others.
A person’s wealth is created through various methods and not just through having a job.
Typically, it also accumulates throughout a long period. Building wealth is an unending journey.
You don’t just stop when you reach a certain amount in your bank account.
It is a life-long journey you take to make sure you are financially safe for the rest of your life.
Here are some tips:
Create a budget
This is probably an overly used advice.
If you are already doing this right now, then good for you.
You’re already doing good.
However, if you’re still one of those people who are too lazy to create a budget, it’s time to level up.
Decide on your budget.
Decide on how much money you want to save, invest, and spend.
Saving after spending is one of the most common mistakes people always do.
The key to building wealth is to save and invest first, then spend what is left.
To do so, you need to set a fixed budget.
Ideally, you want to save more than you spend.
However, for most people who are beginning to follow a budget, it might be tricky.
Simply follow the 60-20-20 rule.
Save 20% of your income and invest the other 20%.
Then, spend 60% of your income.
It’s a basic budget, but it will certainly hold you accountable.
Furthermore, it reinforces consistency in complying.
Over time, you can always modify the 60-20-20 rule.
Some use the 50-30-20 rule or other variations.
There are plenty of excellent apps to download on your phone.
These apps allow you to track your spending.
Sometimes, we are very blind to how much we are spending daily.
This often leads us to overspend and leave us with nothing to save or invest.
Some great phone apps you can get right now are Mint, PocketGuard, and Wallet.
You can certainly browse through Google Play or App Store to find the app most suitable for you.
Here’s another overly used advice for increasing your wealth.
However, we can’t overemphasize its importance.
Spending your money wisely doesn’t only entail looking out for sales and deals.
In its core, it asks you to think about how much value something is bringing to your life.
Calculating the cost per use of an item is an excellent way to do this.
Don’t get the cheapest piece of clothing or gadget to save money instantly.
Figure out if the item will last you a long time.
Otherwise, you’ll just end up buying a new one and spending more money.
Don’t go into a store just because you see a sale sign.
If you don’t need anything from that store, stay away.
As much as possible, avoid being lured by marketing tactics from these companies.
Furthermore, know when you’re getting a good deal or just being fooled to buy something you don’t need.
Being intentional with your finances is something you should always practice.
Don’t shop when you are overemotional.
Whether you are happy, heartbroken, sad, or confused, don’t use retail therapy as an answer.
It’s just a good recipe for a monetary disaster.
Find a stable source of income
You can’t increase your wealth if you don’t have a stable source of income yet.
How will you get the cash you’ll need to invest if you don’t have an income?
How will you fund your emergency fund if you don’t have an income?
Do you see where we’re going with this?
You need a stable source of income right now.
There’s no shortcut to it.
A stable income doesn’t always have to be a corporate job that pays you every month.
You can open a small business and gradually grow it to generate you a good, stable source of income.
Invest in real estate
Real estate is one of the best ways to increase your wealth.
Many people have increased their wealth to millions because of real estate.
However, this typically requires high initial capital.
If you’re just beginning to invest and don’t have much, it might not be suitable for you.
But it’s certainly something to save up for.
People in real estate can increase their wealth by buying cheap properties and selling them for much higher profits.
Meanwhile, you can also earn by leasing your properties to people or businesses.
Make your money work for you
Wealth creation begins with making your money for you.
Once you are able to find a way to do so, you’re on the right path to wealth creation.
Most of the time, this entails investing your money in various ways.
One of the most common ways to invest is through the stock market.
You can do this in many different ways.
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You can sign up for a broker and buy and sell stocks yourself.
However, it could be daunting if you haven’t done that in the past.
Moreover, you need to learn the basics first before getting into the stock market.
It’s certainly not a quick path to learn the stock market.
However, if you are dedicated, you can certainly reap high rewards in the future.
Another way to invest is on bonds and mutual funds.
Bonds are considered low to moderate risk investments.
This means the risk of you losing money isn’t as high compared to the stock market.
However, its returns are not as high.
If you want a safe method to invest, it’s certainly a good way.
Meanwhile, mutual funds are investing in the stock market.
The fund usually pools all of its investor’s money so they can invest in bulk.
This is an ideal choice if you don’t want to decide on what to invest in.
With mutual funds, you have a fund manager that takes care of it.
Create an emergency fund
An emergency fund is a pool of liquid cash you dip into during emergencies.
This doesn’t have to be physically present in your wallet or stacked in your house somewhere.
You can put this money in a savings account where you have 24/7 access to it.
Emergencies are always unexpected.
Thus, saving an ample amount of money protects you from the financial disaster it could pose.
These emergencies come in medical bills, car breakdowns, car accidents, and surprise expenses due to various reasons.
If you don’t have spare money lying around, you could resort to borrowing money.
Furthermore, you can tap into your investments and other funds.
All of these won’t benefit your financial life.
As a rule, your emergency fund should be at least 3 to 6 times your monthly income.
Before even investing in anything, make sure to create a solid emergency fund to fall back on.
You might think that you won’t get any emergencies soon.
However, these things happen when you expect them the least.
Your future self will surely thank you for setting that cash aside.
Create multiple streams of income
Financial experts always tell people to never rely on one source of income.
Doing so poses high risks to you and your loved ones.
Imagine if you lose that one source of income. How would you able to support your lifestyle?
Many people work in a 9-5 job that seems stable and pay decently.
They have peace of mind working one job that pays monthly.
However, unexpected circumstances can arise.
Your company could go bankrupt, you could get laid off, or you could get sick.
There are plenty of ways that things could go wrong and prevent you from working that one job.
Thus, you need to create other ways to earn.
Building a small business is one of the excellent ways to do so.
If you already have a 9-5 job, it’s still fine.
Find a way to sell things or services in your spare time.
This can be through selling stuff online or offering your services.
It’s surely the first step to increasing your wealth.
Use your credit card wisely
If possible, negotiate your credit card fees.
Most credit card companies agree to waive their annual fees if you just ask.
Avoid paying for fees that you can get away with.
Furthermore, it also applies if you have several credit cards.
You probably don’t need that many credit cards.
A credit card allows you to spend in ways that you can’t before.
When shopping online, transactions go through credit cards.
Nowadays, people are just swiping their cards to get groceries, gas, and other products.
It is too easy to get caught up in the habit and end up with so much debt.
Having a credit card comes with a lot of responsibilities.
Thus, you have to be disciplined and educated to use it wisely.
Many people are in debt due to credit cards.
These companies can be notorious for charging high-interest rates.
Moreover, they are also known for luring you to spend more money using their credit cards.
Most often, these companies have a good points reward system.
This encourages you to pay for everything with your credit card.
Furthermore, they also give cashback and other gifts when you first open a card.
These companies use other marketing tactics.
Be aware of them and be wise.
If you know yourself and know you’re not very responsible when it comes to your credit card, then it may be time to get rid of them.
You can always pay with cash.
It’s easy and helps you visualize and realize how much you’re spending.
Pay off high-interest debts and become debt-free
You can’t start gaining wealth if you are in debt. It’s just not possible.
Almost everyone has some form of unpaid debt.
This could be in the form of house mortgage, car loans, and credit card debt.
The thing with debts is that they charge interests and fees if they remain unpaid.
However, we understand that you can’t simply wipe out your debt, especially the big ones.
We don’t advise you to pay off house mortgages in a whim.
We recommend you pay your high-interest debts.
This includes your credit card, payday loans, and other payday loans you might have taken.
Wealth creation tips:
1. Invest in experiences and memories
We all fall victim to the traps of consumerism.
Nowadays, people have plenty of ways to spend their hard-earned money.
Society doesn’t give too much emphasis on saving and becoming financially secure.
The media is encouraging everyone to get the best of the best.
Furthermore, the media is always bombarding us with ads of things that they think we should possess.
From smartphones, clothing, shoes, to nice houses and cars…our money is going to things we don’t necessarily need to buy often.
We’re not recommending to spend your money on anything.
However, we advise spending your income on things that will last.
This includes experiences and memories.
Instead of upgrading your new phone, why not spend your cash travelling around your country?
Why not spend on a cooking or photography class?
Instead of going on shopping sprees all the time, why not save the cash to go on a nice vacation?
2. Invest in yourself
Investing in yourself is usually unheard of.
Everybody’s always talking about investing in the stock market or real estate or other ways to generate wealth.
What about yourself?
This means spending to improve yourself.
It could be physically through pampering salons, getting a new wardrobe, etc.
However, it could also be through educating yourself and improving your skills.
Get that great financial and self-help book if it’s going to help you out.
Take a class in improving your communication skills.
Learn how to improve your technical writing.
Initially, you might think that it is a waste.
However, later on, these skills could potentially help you gain more opportunities.
Thus, you could capitalize on these skills to help you earn more.
Investing in yourself will surely give you extremely high returns in the future.
3. Practice consistency
The key to success in anything is consistency.
Following any of the steps above won’t help you build wealth if you don’t do them consistently.
When it comes to wealth, you need to be diligent, patient, and consistent.
4. Teach your family how to build wealth
If you want you and your loved ones to live comfortably throughout your lives, you have to teach them how.
It doesn’t have to be in a formal way.
Simply letting them know the basics of investing, building an emergency fund, and the like is enough.
If they express interest in knowing more, you could explain to them in more detail.
However, it is best not to push any ideas into them initially.
Most of the time, your family and friends start to imitate your ways once they can witness its benefits in your life.
Let your work speak for itself.
Once they see the benefits of being financially aware, they will seek it themselves.
Furthermore, teaching young children the basics of making money and building wealth creation is going to benefit them immensely in the future.
In most families, this isn’t a topic in daily conversations.
However, if you want to create a legacy of financial freedom, you should discuss money more often.
Discussing it doesn’t mean talking about how much wealth you have.
It entails discussing better ways to earn and save.
Warren Buffet once said, “If you don’t find a way to make money while you sleep, you will work until you die”.
It tells us how important it is to invest and make our money work for us.
This emphasizes the importance of investing in increasing your wealth creation.
Thus, if you want to build wealth truly, you have to find more ways to earn.