How to build wealth has been a question that many of us wanting to know in order to live better or even being financial free.
I would like to share the 3 concepts on how to start building wealth. It would be best if you started at young age as to me time is a good resource for building (compounding) our wealth.
But I believe, it is never late (regardless of age) to adapt this concept to build wealth.
Content:
- Cycle of the 3 concepts
- Concept 1: Increase income
- Concept 2: Save
- Concept 3: Invest
1. Cycle of the 3 Concepts
There is no fix rules, you must increase income then you can save and then invest.
You may start saving and then invest your money while finding ways/invest time to increase your income.
Likewise, you may have some savings, you can start investing your money while finding ways/invest time to increase your income.
The above sequence (Increase income, Save, Invest) is for easy illustration purpose.
2. Concept 1: Increase your income
Upgrade yourself
If you are currently have a full time job, depending on your job scope & industries, you may able to find ways to upgrade yourself and add value to the company you working for.You can get a certified license, attend courses, take up relevant skills and read self-help books.
The more values you can add to your company, I always believe the higher the chances of you getting pay raise, promotion or getting more incentives/bonus to increase your income.
But of course, I cannot guarantee that you will sure get what you've deserved as final decision is still depends of your supervisors, company management and bosses to decide.
Even your current company does not appreciate, with the relevant skills and correct working attitude, you should able to earn more in other company.
Side Hustle / Freelance Job
You can do some side business or freelance job during your free time to increase your income.3. Concept 2: Save
Pay yourself first a certain percentage or certain amount when you receive your paycheck
You can start paying yourself with 10%, 20% or 30% of your paycheck before paying your other bills or expenses.Or maybe you can start paying yourself $50, $100, or $200 to yourself first. Whichever you are comfortable with. But you must kick start with an amount now.
You can make it a point to increase the percentage or the amount monthly or yearly in order to grow your savings.
Track your expenses
Do you in any point of the time you wondered where have you spent the money when you check your account balance or you saw your accounts balance on the ATM machine/receipt? Asking yourself where has the money gone? How come the balance is so low?You should track your expenses so that you know where you had spent the money and try to adjust your spending habits.
There are many free apps available in Google Play & Apple App Store that you can download and use to track your expenses.
With the tracking, you can see which areas you can lower the expense or even stop spending to save the money.
Budgeting
You can also start budgeting in order to control your spending.Example:
As above example, with tracking your expenses, you can budget your expense and save the savings.
Save at least 3-6 months of your monthly expense as Emergency Funds
With this emergency funds, you can use it for any unexpected emergency expense such as vehicle breakdown, medical bills, housing maintenance, etc.With the Emergency Funds put aside, you can use the remaining savings to invest.
4. Concept 3: Invest
Invest your time & money
You should let your money works for you. There is no small amount to start. So Start invest your money now and let the compounding does the works.As all investments may or will have risks, please do your own diligent researches or consult certified professionals make informed decision for your investments.
You can also invest your money to attend paid courses, buy self-help books/e-books to upgrade yourself to increase your income.
You can invest your time to improve or acquire the necessary skills for your full time job or for your side hustle to increase your income online.
As you can see all the 3 concepts are like a wealth cycle.
It easy to say than done as it is never easy in building wealth. It takes many hard works & perverseness.
You should repeat this cycle and start building your wealth with persistence.