The Basic Rules for Wealth Creation
The following is a guest post written by fellow finance blogger and friend Mr. Moneybanks over at www.multimillionaireroad.com. We decided to collaborate and do a blog swap to share our ideas on the subject of wealth creation. I hope you enjoy his article and don’t forget to head over to Multimillionaireroad.com to check out our thoughts on the topic.
Ever since I can remember I wanted to build wealth and make my millions. We can discuss the ethics and motivations of this goal another time. This article will outline my views on a strategy to build wealth. I will outline a general strategy and leave you to search Adam and my respective blogs to find out more.
A Quick Introduction
I’m a 24 year old trainee accountant for a big global financial services firm with a goal to run my own Investment Company. I spend a lot of time reading and experimenting with personal finance and enjoy investing in shares. I started my blog back in second year of University to track my progress on my goal to become a multimillionaire. I write about all areas of personal finance, but normally things that have inspired me in my daily life. The highlight is my quarterly multimillionaireroad plan review update where I detail all my net wealth. See my most recent October 2013 update. I’m far from making my first million but if you look at my progress over the last year and a half, I believe that I am on track.
In my opinion the strategy for wealth creation is pretty straightforward on paper but difficult to implement in practice; particularly in find the motivation!
Here is the “paper” bit:
Job: The first thing to do is to get a job. You need a primary source of income to ignite your plan. People say that applying for jobs is a full time job in itself. You need to be scouring all avenues in the search for a job – put your CV online, utilise recruiters, call up Companies to see if they have a position and utilise your network.
Avoid Debt: Whatever you do, however much debt you have, don’t take on any more debt! Debt is the antithesis of wealth creation. By taking on debt you may have more money in your pocket today but in the future you will be poorer as a result than had you never taken on that debt.
Automate your Savings: The second your paycheck hits your bank statement you need to be saving a portion of it. I would suggest setting up a standing order to a savings account from your primary current account. The money should come out the day after you receive your paycheck. I’d recommend saving 10% of your paycheck and then see if you can increase it over the following years. The reason to automate is to take saving out of your hands. Most people do not have the discipline to save regularly and will wait to see what’s left at the end of the month. NEWSFLASH: there won’t be anything left. Automate!
Make your money work for you: The ideal situation is that you have so much saved up that you could live off the interest alone. In the meantime you don’t want (all) your money just sitting on a savings account earning a meager amount of interest. Make sure you have some emergency savings, a couple of thousand in place in case you lose your job. With the remainder of your savings and all future savings place a portion (I’d suggest 50%) into higher risk investments, especially if you aren’t saving for anything in particular.
Give yourself time: Rome wasn’t build in a day. Neither will your wealth. Building wealth takes time and patience. You will get frustrated and face setbacks but persevere and you will be rewarded.
If you’re interested in a more detailed explanation of building your wealth check my How to become Rich series.
Thank you for reading and thank you Adam for the blog swap!
Now, putting the plan into practice is up to you.
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