What really is wealth? The dictionary definition is simple – an abundance of material assets and money. However, the real essence of wealth goes way beyond those two. Consummate wealth has to include all-round well-being plus living a purpose-driven life. Anyways, it is a well-established fact that we ought to create wealth. The Bible evens points out that a father ought to leave an inheritance for his kids and kids’ kids. Wealth is significant, and in this article, I will discuss 7 simple keys to create wealth.
Passion And Energy
Before I even get into the other keys, the first and foremost are passion and energy. These two are symbiotic and highly central to laying the groundwork for wealth creation. Passion is a powerful, compelling feeling or emotion. Energy is the strength and vitality required for sustained physical or mental activity. You must prime yourself to have these two if you are to succeed in your journey to create wealth. Be passionate about what you are doing and put in the energy.
We cannot talk about wealth creation without savings. Savings are what create the platform for you to invest. By the way, making investments is central to wealth creation. That is why you find that I shall be discussing some important things to bear in mind when making investments. Savings also help you to solely focus on increasing your income. Here is the thing, when you have savings – which you should categorize – you will direct more of your energy on multiplying your money.
For instance, it is usually recommended that you must have an emergency fund of at least 6 months’ worth of fixed monthly expenses. This means if you do that, at any given time you can focus on building wealth without any worries for at least 6 months in the role. The cycle actually becomes perpetual i.e. all the time you can dwell on wealth creation, exclusively. Need I mention but let me just mention for those who have never heard of it – “save before spending”. Make saving strategic, calculated, and deliberate.
Handle Windfalls Wisely
Windfalls are one of the most important ingredients to wealth creation. Dictionary definition of windfalls is a large amount of money that is won or received unexpectedly. Windfalls can come in the form of winning in a contest, bonuses, pay raise, gifts, and so on. The usual temptation is to blow that money away recklessly – people do this on the premise that it is not money I necessarily worked for. However, this should be money you should either save or invest immediately. In simple terms, regard any windfall in this way: it is not meant for expenditure but rather it is meant for savings or investments (whichever comes first according to your discretion).
Passive Income Is Needed
A simple mantra for wealth creation is “making more than you spend”. There is no way you will ever do that by depending on a salary, a single one at that. Probably if you have multiple jobs you might make more than you spend but it is not the best approach. You have to start businesses or make investments that will ensure you have multiple income streams. It has to then go beyond that and be such that your income is passive. What is passive income? This is income that is generated without you being actively involved. Like they say you must get to a point where you make money whilst you are asleep – that is the apex of wealth.
Check Your Expenditure
Every other key in here will mean nothing if you cannot check your expenditure. When I discussed windfalls it is apparent I was hinting on this expenditure aspect. Wealth creation calls on one to be much disciplined in how they spend money. Notice also that on savings I mentioned about saving before your spend. Exercising conscious and disciplined spending is an integral part of creating wealth. This also implies that you must take time to budget and follow through on those budgets.
To Note On Making Investments
Arguably the biggest feature of the wealth creation journey is making investments. Since it is inevitable I have to share with you some important things to bear in mind. When you want to either start a business or invest in one. It could even be that you have been approached by someone with a business proposal for a strategic partnership or joint venture. The most crucial thing you must assess is the business model. The business model stipulates how a business makes money. Piece of advice – if you do not understand the business model then it is wise to not invest. Investments entail many approaches, one of which is buying shares or stocks. If you are not planning on keeping shares for at least 10 years then do not buy them. Shares are basically long term anyway so you must be prepared for the long haul.
Use Authentic Information
Each key I have discussed will require decision-making at various stages. Do not make the mistake of basing decisions on wrong information. We live in a world where there are now lots of content online. From news to personal blogs and the like, there is so much information online. That is why the amount of false information online is also now staggering. Always rigorously ascertain the authenticity of information before you pass it off as true. This is a crucial key in wealth creation and if not well considered can short-circuit all the other keys.
I wanted to be as simple as possible so there you have it, 7 keys to wealth creation. Wealth creation is not a microwave experience, it takes time and that is why tenacity is paramount. Let me also add that you must become so in touch with the tenets of delayed gratification if you are to make significant progress in this journey.