The secret to becoming wealthy can be summarised in 4 simple steps
There is wealth and then there in income. Most people mistake wealth for income. Wealth is the difference between your assets (the things you own) and your liabilities (the things you owe). Ideally your assets must exceed your liabilities. Income is the money that you generate from your job or business. Building wealth is actually simple and can be summarised in 4 simple steps. They are as follows:
Grow your income
- Start a business
- Find a better paying job or work hard and get promoted
- Learn to budget and strictly follow your budget
- Cut down on wasteful expenditure. Most people tend to increase their expenses as their income rises. Avoid lifestyle creep whenever your salary is increased or your income grows. Learn to save.
- Invest in unit trusts
- Invest in fixed deposit accounts
- Invest in index funds
- Invest in real estate
Grow your assets and reduce or get rid of your liabilities
- Buy assets that generate money. Avoid buying expensive, high fuel consumption vehicles.
- Avoid getting unnecessary loans
- Pay off your loans to avoid incurring interest expense
Take note of the above 4 steps and start building your wealth today. Consider saving at minimum 20% of your income. You can create a lifestyle off 80% of your income.