Wealth is the biggest aspiration of people these days. The lure of money is so great that people even resort to unfair means to gain it. That’s why so many scams are also there these days promising get rich quickly and people regularly fall prey to it. The glare of materialistic happiness is so strong these days that we get hypnotised by it easily. But creating wealth is not a short term project but a long term one. Short cuts in creating wealth will always lead us t the world of crime or getting scammed. It is better to take a slow and steady approach to it. Financial decision is a key factor in creating wealth.
Now let us see some of the things we can do to create wealth for us.
Save and invest.
This is one of the key factors for the middle class family. But these two are two different things. When we are keeping aside some money in liquid form from our earning then it is called a saving. It can be kept in home or in a savings bank account. Investing means to utilize the saved money in some schemes which will generate income or increase the total amount over time. In young age we should save/ invest at least 40% of our earning. You should develop a reserve of 6 months expenses. Don’t wait to have a sizable saving before starting to invest, but start investing small amounts also.
Dont put all your investments in one basket. Spread it across 3-4 options, and don’t feel afraid to invest in stock market for the long term.
Spend wisely.
Here we go wrong in young age. We generally overspend when we are young and earning and unmarried. Most of these spending go in to things which we can do without. Always ask yourself these two questions before purchasing anything.
- Do it need it?
- Do I need it now?
This will give you the correct answer as to whether you should spend on that thing or not. A lot of our expenses go in to eating outside these days which can be easily avoided. Also don’t try to keep up with the latest fashion trend always; we keep on piling up dresses and most of the older ones we wear very less. Also don’t change your mobile phone too quickly. If it is working properly then don’t go for a new one every 6 months.
Don’t go out for shopping with friends who spend too much on shopping. In this case you also end up buying things which you actually do not require.
Work hard.
For the middle class people like us, hard work is proportional to more earning. In the young age especially it is important to work hard to increase your income as you have more energy and motivation. Also money earned in the young age will get more time to increase when invested wisely.
Have a budget.
Always do budgeting of your earning so that you are clear about how much you earn and spend and on what things. If you keep a record for 3 months then you can analyse what type of spending habit you have. This will help you take corrective action. It is said that after you reach your saving and investment target, whatever is left that you can spend. Follow this rule and try to cut expenses after analysing your expenses.
Invest in yourself.
Always be open to learn new skills and upgrade your knowledge with the changing trends. Always keep yourself up dated in this field. This will help in creating a demand for you in the job market. Any amount spend on this is basically an investment which will always pay good returns. There is nothing as free money; no one will give you that. The only way to increase your money is to invest in upgrading yourself or investing your money in some good and reliable schemes.
As I said earlier discipline is required to increase your wealth. The earlier you start investing the better for you. A lot have been said about the power of investing early and the power of compounding which all of you know. It is also not bad to take some risk in investing but be sure to keep it limited.
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