The Top 10 Ways To Build WealthBuilding Wealth - What It Means
Wealth is defined as the duration you can maintain your standard of living without working. Building wealth for most means investing, but investing is only one of the processes involved in wealth building.
However, why is it that when two people get the same income, they end up having different wealth? What are the keys or ways to building wealth? What is the reason why there are richer people than others? We are going to summarize the ten ways in brief points, but discuss extensively on one of the most important aspects; saving:
- You Must Desire Wealth: It is impossible to achieve something you do not want and think that you can get it.
- Understand Wealth As Positive: As antagonistic to the first point, you can’t get something you hate either. It would be best if you accepted it as something positive.
- Identify The Percentage You Want To Save: With each consumption gesture, you decide the destination of your wealth. So first decide what part you want to keep for yourself, as a payment that you make to yourself. Think about what percentage of all the money that passes through your hands you want to save. Thus, if you establish that it will be between 10% or 15%, it is a matter of withdrawing that amount. You will end up adjusting your spending level to your disposable income. Save.
- Wealth Is A Continuous Act In Time: Except by chance, if you are not rich now, tomorrow you will not be either. It is an act that is prolonged in time. A small act of saving, by itself, generates absolutely nothing. However, maintained for a long time over time, it generates a wealth that can reach a considerable magnitude.
- Reduce Your Expenses: The first thing is to identify what your minimum mandatory expenses are. You have fixed expenses that you have to assume indisputably. You will realize that some are not necessary and you can reduce them.
- Decide The Maximum Level Of Whims You Want To Allow Yourself: Do not eliminate the whims; reduce them. Limit the amount of your wealth that you want to spend on certain things, which can satisfy you simply in the short or medium term.
- Make Your Wealth Work For You: When you can save for a time, you can invest, which could generate more money. Wealth generates more wealth.
- The Best Time To Plan Your Wealth Is Now: If you start today, tomorrow you will have a little more saved and a little more wealth generated. Grain by grain you get the mountain.
- Think About Retirement Today: Although your retirement may seem far away, now is the best time to take care of it. If you start doing it in your last working years, you will have to save a lot. Also, if you keep the money in a certificate of deposit, you will have more interest over time and your capital will grow.
- Create Your Own Rules: Make the decision not to spend money on things that “most” buy, to be fashionable. Define your spending limits, for example, no more than $50 on a pair of shoes, no more than two meals out per month, etc. Make it a rule to not spend more money than necessary on things that are not essential to your life, and you will avoid falling into temptations.
The above points are the simple ways you can build wealth, but you need to work on savings—below are ways to go start your savings.
Top Tips to Help Kick Start Your Savings
The rising cost of living is becoming more and more apparent as weeks go on. It seems we can no longer fill up our car or do the grocery shopping without having to pay a few dollars more each time.
Despite the tough economic times, many have done a great job of reducing their outgoings and saving money. However, rather than maximizing it in a savings account, they are simply holding it in a current account and essentially earning very little interest.
Admittedly savings rates are not that attractive at the moment; however, this shouldn’t put you off the idea of saving. Having savings to your name is extremely beneficial to your finances as it improves your financial stability and can also cushion the blow of a large unexpected expense.
Here are a handful of tips to help you kick-start your savings:
Take Note Of Your Finances
To save money, you need to have full control over your finances; you need to know how much you’ve got coming in each month, how much you’ve got going out and where it’s all going. The single most effective way of tracking this is by drawing up a budget that categorizes all income and outgoings. By having a strong understanding of your finances, you can work on finding areas where you are overspending and subsequently make cutbacks.
When assessing your outgoings, try to classify them into the following categories:
Household Bills – this will include your rent/ mortgage payments, home insurance, utilities, landline, broadband and TV costs.
Living Costs – this will include food and drink, clothes and shoes and hair/ beauty products.
Insurance, Loans & Banking – in this section include insurance costs such as life insurance, health insurance and PPI, any overdraft charges you’re currently paying and any loan or credit card repayments you may have.
Family & Friends – this section will cover all child costs such as childcare, baby items, babysitting costs, school fees and school dinners. If you have any pets, then include pet costs in here too.
Travel & Transport – this will cover your monthly petrol/ diesel spend, your car insurance premiums, breakdown cover, road tax, MOT and parking costs. Also, ensure that you include anything you spend monthly on public Transport.
Leisure & Entertainment – under this section you should include any days out or nights out, any subscriptions including gym or health club memberships along with any vacations you are going on for the year.
Now, the majority of the outgoings included will not be fixed, meaning they’ll differ every month. Rather than simply taking guesses at the amount you spend on each of these sections; gather some recent bank statements and take a three-month average – the more months’ data you use, the more accurate your figures will be.