Wealth creation is not important of itself. Money is just a means to an end. The more you have, the more options open up to you. It gives you freedom to do what you want in life.
You may want to run a business, travel the world, have a family, help others, or just relax and enjoy life. Investing in some truly independent wealth coaching early on will put you streets ahead of everyone else. No, really!
If you follow the basic wealth creation principles outlined here, you’ll automatically get richer. These are simple but proven strategies used by every successful investor in the world.
Get rid of “bad” debt
As any good wealth coach will tell you, this is the first step to wealth creation. Bad debt is credit card debt, hire-purchase, car loans, and other high-interest loans. Get rid of it!
Good debt may be a home loan, investment property loan, student or business loan. You must erase bad debt from your life before trying to increase your wealth.
Get financially educated
This may sound daunting for some people, but you don’t need to go out and get a business degree to learn the basics of smart money management.
Imagine how much you could learn in a year just by reading books and articles about money for 20 minutes a day. This information is all around us – online, in books, magazines, newspapers, TV and radio. Everything is there, just waiting for you to take advantage. For Kiwis, a good place to start is sorted.org.nz.
Invest at least 10% of your income
It’s not how much money you make, it’s what you do with that money that counts. Some people think they can’t possibly save any of their income, as all of it is used up paying for the necessities of life.
Wrong.
Anyone can invest at least 10% of what they earn. Look at exactly where your money goes, break it down, and recognise those areas where savings can be made. Alternatively, find extra income from somewhere else.
Pay yourself first
Set up a monthly or weekly automatic payment into some kind of investment vehicle or savings account. The sooner you start on this road, the greater the rewards. Such is the magic of compound interest.
Buy assets, not liabilities
With the money you have, buy more assets than liabilities. An asset is something which (generally) increases in value, such as shares, bonds, property, and businesses.
A liability is something which decreases in value, such as cars, clothes, and other consumer goods. This doesn’t mean you have to live like a pauper. It just means you know the value of accumulating wealth before accumulating toys and luxuries.
Pay less tax
For most of us, tax is our largest single expense (yes, really). There are many ways to legally reduce tax, and keep and invest more of your own money. If you’re an employee on PAYE, starting your own home-based business is essential if you want to reduce your tax burden. A good accountant will be able to help you with this.
Following these simple wealth creation concepts will ensure you automatically get rich!
What do you think? Let me know in the comments below.
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