What does being wealthy mean to you? Some people would like to think that being wealthy is the opportunity of being able to take your dream holiday at a moment’s notice or the assurance that if something unwanted does happen to you, your family will still have a roof over their heads and money in the bank.
Each of us may have different interpretations of being wealthy and what is needed for wealth creation but all of us often agree on the same thing and that is being wealthy means having extra money, and lots of extra money that is not intended for any other specific use.
This brings us to the most important question, how is wealth creation done? Is it remotely possible to become wealthy by working for someone else or do you really need to start out your own business and endure all the risks that come with it?
Truth be told, wealth creation is about making smart money choices, irrelevant of what job you have. To take a closer look at your chances of wealth creation, carry out a quick analysis on your income generators. What are the factors in your life that can and are making you money? Even if you are working for someone else, is your salary able to cover all your necessary expenses and provide you with savings?
Wealth creation would only become more successful if you are able to identify the strong points of your finances and how you are able to make the weak points of your finance even stronger.
Consider the possibilities of making extra income through other income generators such as property rental, a second job, online business services or even catering services. Looking at all the possible income generators you have around you and finding ways to ensure that they are being made full use of is a very big step towards wealth creation.
Once you have established your income generators, look at ways to effectively manage your expenses in relation to these income generators. Does your income generator incur any cost to you, be it monthly or a one time fee? If you have purchased your necessary overheads for your income generator, you must know the approximate time needed for the costs to be recovered. Knowing your expenses in and out will be able to give you a clearer time frame for your upcoming wealth creation.
Outside your income generators, make it a point to list out your expenses so you will know how much you are spending on items that you need and items that you want. Just like having a healthy budget, wealth creation also revolves around being wise about what to strike off your expense list.
The next pointer that is essential in wealth creation is the ability to maintain your investments and eventually increase these investments at an appropriate and beneficial time and cost to you. Investments are never risk free. But the trick to being wealthy is in knowing which investments are able to pose less risk or even if they have a chance of complete failure, what are the steps that will be needed to recover your losses.
You would need to look at investments that can provide you with maximum returns on money spent, even if it takes longer than others, this is usually much less risky than investments that boast quick returns. The faster the returns usually means the higher the risk for that particular investment and higher risks of course reduce your chances at wealth creation.
Property development is usually one of the less risky forms of investment but often requires maintenance expenses and a longer duration before you are able to make money from your investment and adding this to your wealth creation balance. Increasing your investments must be done when your finances are able to cope with additional risks and not just because you have found an investment that you like.