This article is for those:-
-Who earns but unable to save anything
-Who saves but unable to build wealth
We start with First one i.e.:-
1) We earn but unable to save anything:-
Steps to be followed to overcome from this situation:-
- Change your habit:-
Change your habit from expending first to saving first. Whenever you get money, first set aside 10% to 20% of it immediately. Don’t postpone it by thinking that first we will expense and then we will save. That is never going to happen. Just keep one thing in mind that you don’t have received Rs.100/- but only Rs.80/- or Rs.90/- and that only you have to expend.
- Prepare your Budget:-
Except households, everyone has their Income and expense statement including the Government. Then why should we want to remain an exception? Just start preparing your personal Income & Expense statement. And importantly don’t depend upon your so-called brilliant memory. Have a practice of noting down things, either on your gadgets or on the paper. I prefer pen and paper to note down.
- Shift from Want based to Need based approach:-
Want and need are totally different. Few things you may want but that might not be your actual needs. Like high class i-phones or big cars. These wants and needs may differ from person to person. However, the basic needs of all human beings are the same. Therefore, before going to purchase anything or avail any service, first classified it as your Need or as Want. Then only make decisions.
- Live on your Own Terms:-
Remember our life is our own life. What others think about us is not our cup of tea. Others have many things to say. When your life is driven by feeling about what others would think, you certainly live the life of others and not yours. Everyone knows the fact that what they have and what they don’t have. Don’t try to get into the shoes of others; instead walk on your own path.
Now we will start with Second one:-
ii) We save but unable to build wealth:-
Steps to be followed to build your wealth:-
First congratulations to those who are in Stage II. As at least you are able to save from whatever you are earning. Okay let’s start with –
> Invest 80% to 90% out of your savings:-
If you are saving say Rs.100/- then out of it you have to invest Rs.80/- to Rs.90/-. As at least 10% to 20% would be available to you 24 x 7 in case of urgency. Only compounding factor of investment help you to have more money at your disposal and not just saving.
> Saving is not an Investment:-
Remember one thing, saving is not your investment at all. Earlier people only saved but they didn’t invest. They may have fear or misbelief of losing their hard earned money if they invest. So they kept themselves away from this and therefore many of them were unable to build wealth.
So to change your thought pattern or to get rid of fear mentioned in above Para, start learning on your own about investments. Nowadays lots of learning and informative videos are available on you tube. Use this tool to increase your awareness and knowledge about various investment options available.
Learning and education is the foundation on which you can build your empire of wealth.
> Prepare Investment Plan:-
As I told you in the First part of this Article that don’t depend upon your so-called memory. Note down everything on your gadgets or on the paper. Just like watering the plants builds their roots, the same way noting down things would build your roots of wealth.
If you have expert knowledge then prepare this plan on your own. But, if you don’t have the expert knowledge then take the help of a professional investment planner. There is a difference between knowledge and expert knowledge. You may know a few financial terms and may have basic knowledge but building wealth requires expertise knowledge.
Paying to an investment planner is not your expense but rather it is a part of your investment.
> Take calculated Risks:-
Calculated risks lead you to rewards. If you want to taste rewards you don’t have an option but to take risks. Savings only help you to build investment but not wealth. To build wealth, you have to come out of your comfort zone. You have to move from conservative approach to a risk based approach. For e.g. you have to start investing in the Equity component instead of in Fix deposits and or in debt instruments.
Calculated risks are completely associated with your investment plan. That’s where the need of the Investment Planner is required for.
Hope this write-up would serve you the best!
You can reach to me at [email protected]
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