The Truth About Wealth
Most people confuse wealth with a large income. There is enormous pressure to spend today, to have what we want now and to look successful instead of building wealth and investing for the future.
The equation for wealth building is relatively simple:-
Everything you earn minus everything you spend equals the money, which is left to build wealth.
Here are our truths about wealth.
The primary pre-requisite to wealth has very little to do with money but rather commitment. You must be committed to the changes you are about to make.
2. Building Wealth Takes Careful Budgeting
Building wealth takes discipline through budgeting.
A good starting point is establishing a savings plan. Successful savers devise a budget and/or system to keep their savings on track.
A good way do this is to have savings deducted from your salary and sent to a separate account. Schedule it to occur the same day your salary is deposited and do not spend it.
3. Lose the Plastic
Wean yourself off credit cards as they can promote bad financial behaviour.
Credit cards encourage you to spend money you don’t have. You have to ask yourself whether you really need that purchase and if you do and have the funds available, then proceed.
4. Create multiple streams of income
Many people think that investing in the stock market will make them rich. There is inherent risk associated with investing just in the stock market particularly in volatile economic times.
Our preferred option is to work with clients to create multiple streams of income regardless of regular employment.
This includes earned income, portfolio income and passive income.
Here is an example of multiple streams of income.
|Earned Income||Portfolio Income||Passive Income|
|Generated by||Your labour||Your investments|
|For example||Salary, wages, consulting fees||Interest, dividends, capital gains||Royalties, rent|
Ultimately, it is your decisions that create or hinder wealth creation.
To find out more about your wealth truth, talk to us today. We partner with you to understand your habits, your savings and your attitude and help you make good decisions about the things that you can control.