Summary: Achieving and maintaining wealth requires a systematic approach rather than relying on quick fixes. Start by investing even with a low income; cutting unnecessary expenses can free up funds for investment. Follow the 20-10-70 rule, allocating 20% of earnings to investments, 10% to savings, and 70% to expenses. As your income grows, apply the 50-20-30 rule: invest 50% of the increase, save 20%, and use 30% for additional needs. Seek advice from professional financial advisors, who, like doctors, are worth their fees for managing your financial health. Diversify your income streams by leveraging your skills, and maintain an emergency fund of 5-6 times your monthly earnings to handle unforeseen events. Lastly, plan for retirement early to ensure a comfortable and secure future. Implementing these strategies from an early age can help you build and sustain wealth effectively. Many youngsters nowadays are very keen to become wealthy. They don’t want to do hardship. They are dreaming that they will get a magic stick or pill, so that in a single day or a night they become wealthy person. If you really want to become a wealthy and remained wealthy forever then please remember that there would be no shortcut as such. To become a wealthy one must follow a systematic process and that too from early age if not late.
So let’s learn the 7 mantras one by one:-
- Don’t hesitate to invest even if income is low –
Many times people put forward the very common reason for not investing is, they have not enough income. This reason and or excuse is childish. Why? Because, those who are giving reason of not having enough income, incurred expenses on unnecessary food items and beverage. If they curtail on those items then they can easily invest it. But unfortunately we lack in differentiating what our actual needs and what are not. Therefore track your expense behaviour and stop doing unnecessary stuffs. Move that part of income to your investment.
- 20 – 10- 70 Rule –
It means when you earn Rs.100, first 20% of your earning should go for investment then second 10% of your earning should be used for Savings and balance 70% of your earning would be used for your household expenses. So it can be presented in following formula
Earning = Investment + Savings + expenses
100 = 20 + 10 + 70
- Regularly increase investment when income goes up –
Salaried, Businessman and or Professionals, if our income increases, as per our natural tendency, we spend that part immediately on our so called needs. Here instead of spending all increase in so called needs follow the following Rule – 50-20-30 Rule – It means 50% of your increase should go for investment, 20% of your increase will be used for Savings and balance 30% of your increase would be expanded on your so called needs.
- Professional Advisor –
Human nature is unable to understand. People do not question about fees charged by doctor when they visit their clinic for cure their disease. But same people would think 100 times and question 100 times about financial advisor and their fees. People don’t understand that they are the financial doctors who take care of people financial health. So, if you are not a person who understand the financial statements then please go for professional advisor.
- Create multiple source of income –
Many people under-estimate themselves and their skills. In today’s world any one person may have five or more than five streams of earning income. But we failed to think and strategies our skills. Therefore, think on what skill do you have and turn that still into one of your stream of earning.
- Create emergency fund –
Many experienced person also ignore this part. However, Corona virus opened the eyes of all people and many of us now started to create emergency fund. Emergency fund would be approximately of 5 to 6 times of your one month earning. And it must be in liquid form i.e. you can liquidate it in short period of time say 3 to 4 days’ time. So it is very much important to have emergency fund.
- Plan your Retirement in advance –
As I said earlier in the first para of this article that to become a wealthy and remained as wealthy forever is a systematic process to follow and work upon. And therefore as a part of systematic process planning your retirement in advance is also very much important. From all the angles we must analyze our after retirement life. So that after retirement life would be wealthy and peaceful too.
Hope this small write up serves you!
Be Blissful!
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