The economy has been in a recess recently. Large companies are downsizing and reducing their employment rates. Many people are forced to sell their homes, find second jobs, and live a diminished lifestyle.
How about you? Are you suffering any of the symptoms above? If you are, then it’s time to take your personal finance into your own hands.
The truth is, you have always been personally responsible for your personal finance matters. Maybe most of you avoid taking charge of your own wealth and welfare, and as a result become overwhelmed when the economy takes a turn for the rough.
You complain and you blame, but nothing changes.
You could have avoided a lot of pain. If only you had created a solid wealth building strategy early in your life or career, you would be in a much more favorable financial position.
Do you have good wealth building strategies? It’s always a good time to start now! Having a strategy is important if you want to secure wealth for yourself and your family.
Here are four of the most important, simple to apply wealth building strategies that work for everyone:
Start making a budget
Making a budget to record your income and spending is the most basic strategy you can do.
Many people spend their money almost randomly, without any thought about how much they actually spend. This kind of random behavior is why they always run out of money at the end of the month.
To avoid not knowing where your hard earned money has gone, start writing down the income sources you have. Next to that list, create a list of all the expenses that you make routinely each month.
From this list, sum up your income and expenses then subtract your income with your expenses. Your aim is to have a positive number, which means your income is bigger than your expense. If you have a negative number, then go through your expenses list and find out what expense you can reduce or even cut out completely.
Save the extra money you have
When you have a positive number, it means you have extra money at the end of the month.
What do you do with this extra money? Some people might be tempted to spend it, but you know better right? Of course you save this extra money and put it in savings account!
Saving your money over time increases your value. If previously you always spent more than you earned, now you can start to build a small savings account. The main benefit of this simple act is that you also start to increase your self confidence and self esteem.
No matter how much money you can save, even if it is only a small amount, you must save it. Don’t be tempted to use it for unnecessary purchases. The more money you can save, the faster you can move on to the most profitable wealth building strategy.
Create control over your debt
Personally, I have always lived debt free. My motto is “If you can’t afford it in cash, it means you can’t afford it” (except for buying a house, a car, and school tuition).
Many people though do live with debt. This is the kind of debt that makes them unable to sleep at night. The most common random strategy to pay off their debt is to borrow money – make even more debt!
This is a terrible negative circle that make people miserable. To avoid this, you must control your debt. The aim of controlling your debt is to start reducing your debt amount slowly until you are free from debt or at least have only a small debt to pay.
You can control your debt by paying off your smaller debts. This will give you a sense of accomplishment and encouragement to start paying off your bigger debts.
If the debt is big enough, paying it off could take a very long time. That’s alright, the most important thing is to be patient and persevere. By staying consistent, you will start to develop the habit of good money practices.
Plus, being patient and diligent is an important character for the most important of these four wealth building strategies.
Wisely invest the money you save
This is the part of the strategy that most people don’t even get to in their entire lives. Only a small number of people have the luxury to invest money to increase their wealth.
However, being able to invest is not a luxury at all. It simply means that you are starting to reap the rewards of patiently making a budget, steadily saving money, and reducing your debt.
Investing your money is very important to create more wealth for your present and your future. The purpose of investing is to leverage your money to create more money, without active participation from your part.
There are many investment options that you can choose, including mutual funds, bonds and obligations, or more active investments such as property investing or investing in private businesses.
The most important thing is to make sure you educate yourself about these options. Many people make the mistake of going the popular route, only to have their hard earned money disappear due to ignorance. By educating yourself, you ensure you make only the best investment decisions for yourself.
Once you start to receive the results of your investment, repeat the process! Revise your budget, increase your savings, reduce your debt even more, and diversify your investments. These are the positive wealth building strategies that are sure to create more wealth for you over time.