Adults have different ideas about wealth creation. For the enterprising ones with enough capital, it means putting up a business. For the not-so-hard working ones, it means a miraculous windfall like the national lottery or convincing some rich person to marry them. Then there are those who don’t care to establish their business but would rather play the stock market as part of their personal money management scheme.
But what if you don’t have the money to start your own business, let alone invest in lottery tickets or the stock market? And what are the odds of your meeting a rich person who will marry you and NOT let you sign a prenuptial agreement? If you hold down a stable job and possess self confidence, a strong work ethic and adequate money management skills you can build your own wealth slowly but surely. Here are the ways you can get started:
- Write down your wealth creation goals. Seeing your goals on paper – virtual or otherwise – concretizes your plans and gives you clarity as you define and adjust your priorities over time. One example of a goal would be: “I want to have $20,000 in the bank before my twenty-fifth birthday.” With that amount as your initial peg, you can start building towards your first nest egg. Always stick to a realistic figure. If you say, “I want $250,000 in the bank before my twenty-fifth birthday”, then you’re only setting yourself up for disappointment. It’s better to come up with a conservative amount and surprise yourself by surpassing it rather than aim too high and falling short.
- Plan a budget. If you live on a fixed salary, find ways to allocate your budget that it pays the essentials first, leaves a little for leisure, and leaves slightly more than enough for your bank account. The common advice is to save at least ten percent of your income each month, but try to go for a higher percentage like fifteen or twenty percent. You slightly accelerate wealth creation this way and if your money management is prudent, this is easily attained. You might have to downscale your lifestyle to achieve this but it will be worth it once you start seeing the amount in your savings account go up, up, UP.
- Assume your job is NOT that stable. This might come across as negative thinking, but try to use this to your advantage. People in high-paying jobs tend to get somewhat cocky and forget to save for a rainy day. They blow their salaries on happy hours at the bar, vacations and other superficial things. Then when the company starts downsizing and they get the pink slip, they realize they have nothing in the bank to tide them over. Don’t be like these people. Even if your present job pays good and the company is doing well, try your best to be frugal.
- Eat humble pie. Not a literal one, assuming you don’t know that expression. In this scenario, it means downsizing wherever you can. Do you drive an SUV? Get rid of that gas guzzler and opt for a more economical model. Or better yet, take public transportation. Do you like having wine with your dinner? Skip the wine and opt for an inexpensive drink. Better yet, don’t eat out and learn to eat more at home. Your wealth creation endeavor will not succeed if you insist on maintaining a certain lifestyle that eats up a lot of your disposable income!
- If you have to pay with credit, you can’t afford it! Try to avoid using your credit card and opt to pay cash instead so money management becomes easier. Tracking your expenses becomes a challenge – and sometimes an exercise in futility – when you keep swiping that card. Using cash forces you to conserve money, which is a great wealth creation practice. Additionally, you avoid piling on debt that most credit card users are prone to.
Wealth creation and money management are a lifelong process. There will be trials and errors, but don’t give up. Just learn from your mistakes, keep going, and one day you will hit pay dirt.