Believe it or not, your income doesn’t determine your wealth. The secret is simple and it’s not a matter of earning more. Check out top 5 wealth creation secrets.
Did you know only 8% reach financial independence in their lifetime? To put it simply, out of every 100 people, only 8 will retire comfortably. Why? Because many of us don’t have the financial knowledge needed to create real wealth. The 8% aren’t lucky, nor do they particularly come from privileged backgrounds or have high incomes. They are ordinary people who took the time to understand and learn good financial principles. And you can too…
You only need two things to become wealthy. Knowledge and discipline.
Keep reading and find out how you can start creating wealth with our top 5 wealth creation secrets.
Wealth Creation Secret #1
Building real wealth is not how much you earn, but how well you manage your money. Even if your salary is low, you can still end up wealthier than someone whose salary may be twice as much as yours. How? By creating a money plan…
A money plan is simply a budget. Analyse your spending and figure out where you can cut unnecessary costs. A budget will quickly help you figure out if you are living beyond your means. Your money plan is about creating a better lifestyle with as little money wastage as possible. If we breakdown how much we spend on things that are short-lived, most of us will get a shock.
Your budget goes beyond just categorising your money. It’s about analysing your spending and truly understanding where your money goes. And it allows you to choose where you want it to go. It gives you power over your finances. And if you want to create wealth, the budget is where it all begins.
Wealth Creation Secret #2
We don’t miss money we don’t get. It’s human nature to spend all the money we have available to us. It takes immense self-control to keep easily accessible money without spending it. But if we don’t have it in our account in the first place, we won’t spend it. Therefore, we need to understand the beauty of automated payments. Money goes out before we even get the chance to see it in our bank account.
Automated payments go beyond paying our typical monthly bills. It offers a convenient way to put our money where we really want it. Not where it will probably end up; in someone else’s pocket. Instead it goes into a short-term savings account (for emergencies) and a long-term savings account (for the future), a unit trust or a fixed deposit monthly income scheme.
Most of us try and save or invest what we have left over at the end of the month. But we should be automatically putting our money where we want it at the start of the month. If it was never there, to begin with, we won’t really miss it. Which brings us to our next wealth creation secret…
Wealth Creation Secret #3
A part of all you earn is yours to keep. And it is the foundation of your wealth.
Ask yourself where does your money really go? To the landlord. Or the bank to pay for your bond. To your kids’ school. To the government and to massive corporations who like to hike up prices for things such as petrol or food. But how often do we pay ourselves?
We all pay our monthly commitments and spend the rest. Arrange for your money to go into your savings through a debit order. Remember we don’t miss the money we don’t get.
Wealth Creation Secret #4
Investing means putting your money where it will offer you a return. And it’s one of the best ways to create wealth over time. The trick is to research the risks fully and know how much you can afford to invest.
Savings accounts offer very little when it comes to true capital growth. However, regularly investing small amounts every month can grow fast and big. There are investment opportunities to suit every budget – if you know where to look. Compound interest and regular investment is the way to wealth. So where should we invest our money?
- Property (purchase your own or invest in property trusts)
- Shares (equity trusts, insurance bonds)
- Stocks (shareholder)
When deciding to invest for the first time, always remember that the higher the return, the higher the risk. So, start small. And take the time to understand your investment option.
Wealth Creation Secret #5
If you don’t want to be dependent on charity or the government when you reach retirement, it’s time to start making your money work for you. Your borrowing priorities need to shift from expensive furniture accounts, clothing accounts, expensive cars and huge plasma TV’s that lose value over time.
We all need to ditch the “must-have-it-now” mentality that leads to worthless debt. It is the biggest financial block most of us suffer from. “Buy now pay later” – and pay you certainly will. Worse than the “must-have-it-now” mentality caused by debt is what does in the long term. Borrowing more money to pay bills, is the consequence of living beyond our means.
Many of us have our possessions by paying them off – and paying more for them than they are actually worth, thanks to high-interest rates. But real wealth creation comes from borrowing on a low-interest rate to build assets that increase over time.
If you are struggling to pay your debts and pay for your living expenses, its time to treat the cause and get the help you need. Many wealthy people today were in debt at some point in their lives. They understood that the way to wealth creation is about getting rid of debt that won’t benefit them in the long run. They took the time to fix their finances and apply the basic 5 wealth creation principles in this article.
If you’re struggling with large amounts of debt, get in touch with Debt Rescue today and find out how you can be become debt free in 5 easy steps.
Complete our debt assessment today. It’s free of charge and only takes a few minutes.