No matter who you are, where you are, or what you are doing, you need money. Even if you decide to go completely off the grid, you will still need funds to make the transition. Money isn’t complicated, but there are more effective ways of building wealth than others.
Building long term wealth means planning for the future and being patient. Being patient with money is a hard skill to learn, especially when life tends to get in the way. Long term wealth is built through perseverance and fortitude but how do we get started on the journey to financial freedom?
Your journey starts here. A budget is the single most effective tool for building long term wealth. A budget can help you determine exactly what your spending (and saving.) To create a successful budget, we must be completely honest with our selves, the more realistic we are, the more accurate the budget becomes.
Start planning your budget by choosing a frequency of time that matches your pay cycle etc. Most choose to pay off the mortgage or rent fortnightly, choose whatever cycle fits you best. Now, list all of your incomings like wage, interest on investments, and other income.
After you have listed your incomings, note down all your outgoing expenses. Its time to get realistic and record every little expense, a few dollars every day can add up over a year. Now you should have a balance of your incomings and outgoings, and you should have a positive cash flow at the end of your chosen period.
Here comes the fun part, with an overview of your finances, you can better determine any changes or tweaks and how much you can save or invest. Don’t be afraid to swap and change the things that aren’t working. How long has it been since you checked the health of your home loan? There are many ways to save money, don’t be afraid to make a mortgage comparison for a better deal.
Changing up your home loan for a better rate is a perfect example of my second way to create wealth: substitution. By substituting a lengthy, expensive home loan for a cheaper home loan from a better lender, you can pay off big expenses quicker, creating more wealth in the future.
Substituting things doesn’t have to be as high level as changing your home loan, you can apply this wealth-building strategy to anything. Substitute your Netflix account for a walk in the park or takeout for home-cooked meals. Look for ways to not only save on expenses but better your self in the process.
Building wealth is not all about savings accounts and refinancing home loans; it’s about creating the best version of yourself. Building a skillset goes hand in hand with wealth creation and opens more opportunities for business and pleasure.
Becoming an investor is a life long journey, one that you might not even consider your self taking part in. Investing drums up images of men in suits, with graphs and pie charts galore, thankfully, investing is much more exciting than that! Investing is about reading the signs and building personal wealth over time.
Where should a budding investor start? If you have a home loan, or a looking to apply for one soon, you are investing. A home loan is a great investment product; it allows you to buy into a property over time, without a huge initial outlay. A home loan will take decades to pay off but allows you to buy into the market at today’s prices, reaping the benefit of any price rise in the future.
There are other ways to invest without locking into a home loan. A term deposit or high-interest savings account can net small rewards for zero effort. For the less risk-averse, the stock market is an exciting and lucrative way to make your money work for you.
Similar to substitution, simplifying your life can be a brilliant way of building wealth. Do you find your self questioning the validity of ‘the rat race’? Modern life is frantic and complex, the mounting pressures can distract us from what is really important. Take a step back, do you need that high-speed internet? What about that new car? Be real and live life simpler, you will be richer in time and spirit.
Be rich in other ways.
Money can’t buy happiness. I used to think that was a phrase that poor people told themselves to feel better, but it’s not. Sure, we may be happier with the finer things in life, but the happiness is fleeting, its not real.
Live a rich family life. Be merry and social and enjoy other peoples company. Being rich in friends and love is the easiest way to save money and live a full life. When all is said and done, your money won’t love you, only your friends and family will.
Building personal wealth is not complicated, but it takes discipline, hard work, and a healthy dose of faith. The best way to increase your financial position is to cut down on excess spending and find a better paying job. Finding a well-paying job is easier said than done, luckily we have gone through several methods of building wealth.
By assessing your self, and being aware of your habits, you can start to take control of your life and your finances. By substituting comfortable, costly activities with healthy, free activities, you can start to build a healthier version of yourself while saving money.
With persistence and patience, anyone can start to build wealth. Above all else, it’s better to be rich in family and spirit, and usually, the right balance will yield the most happiness. We need money; there is no way of getting around this. By placing your priorities in personal development, it’s possible to achieve financial freedom while growing as a person. Skilled, independent and surrounded by family, that’s real wealth.