Being rich is having money, being wealthy is having time – Margaret Bonnano.
There is a glut of books on the subject of creating wealth. This subject always fascinates us as we strive to achieve the goal of financial freedom. And what is financial freedom? Someone once defined financial freedom as being able to do what our heart desires without having to worry about where the money is going to come from. It is being able to live our lives the way we want. It is about getting out of the rat race. It is about having the time and money to pursue our dreams and our purpose in life.
How does one accumulate wealth? It all seems so simple……saves a part of everything you earn and invest it. Yet the majority of us fail miserably to even make ends meet. What is wrong with us? Are we fated to be poor? Or do we lack investment skills?
I guess a lot of us want instant gratification. We know we need to save so as to accumulate wealth. But the need for instant gratification makes us lose track. We must buy that new home theater system or that new computer. We must go for that overseas holiday. Even if we don’t have the money, we can charge these purchases to our credit cards. We start getting into the habit of accumulating credit card and financial debts. Before we know it, we are literally working just to service all those debts.
The lack of patience is another factor that contributes to our financial downfall. Sticking to a plan requires a lot of patience,sacrifice and determination. We often give up when we see the slow progress that we are making towards achieving our goal. We fail to realize the magical power of compound interest. Given time and a reasonable rate of return, regular savings can grow into a huge fortune.
And yes, many also seek instant gratification when it comes to accumulating wealth. Just look at that immense popularity of lottery and gambling. We lose sense of the incredible odds that are stacked against us. Wake up, there is no free lunch!
One book that has touched the lives of a lot of people is “The Richest Man In Babylon” by George S. Clason. It has become a classic and a must-read for all who seek financial literacy.
In a nutshell, the book spells out the following seven steps to accumulate wealth (or as the book puts it, the seven cures for a lean purse) :
Step 1: Start Your Purse To Fattening
Save at least 10% of everything you earn. A part of all you earn is yours to keep.
Step 2 : Control Your Expenditures
Budget all your expenses, making sure you do not spend more than 90% of your earnings.
Step 3 : Make Your Money Multiply
Make your savings work for you. Take advantage of opportunities.Remember the power of compound interest.
Step 4 : Guard Your Assets From Loss
Be prudent in your investments and make sure your principal is safe. Insure also your assets where possible.
Step 5 : Make Your Dwelling A Profitable Investment
Buy your own house with cash or as big a downpayment as you can. Don’t buy a house if you are going to incur a huge mortgage. You may think you are buying an asset but you are actually taking on a huge liability.
Step 6 : Insure A Future Income
Plan well in advance for the needs of you and your family. And don’t forget to insure your own life especially if you are the sole breadwinner in the family.
Step 7 : Increase Your Ability To Earn
Seek out new skills. Learn new things. Take up study courses. Increase your earning power.
The key to financial freedom is to make your savings multiply. In the words of Robert Kioyasaki, author of “Rich Dad And Poor Dad”, the poor and the middle class work for money but the rich have money working for them.The rich know how to convert their earned income , if they have it, into assets that generate passive and portfolio income.
Embark on your journey to financial freedom now. It just needs a firm determination on your part. Where the determination is, the way can be found.
“Every morning I get up and look through the Forbes list of the richest people in America. If I’m not there, I go to work.” Robert Orben