“How can I grow wealth?”
I hear this question (or some variation of it) almost every day. First of all, I’m happy to provide answers and advice, there’s something I’ve noticed about most people who ask this question.
They don’t take action on the answers. They don’t follow the advice.
Very few people actually get proactive with their finances and take initiative and responsibility. Very few focus on what they can control and get in action.
The truth is, growing wealth doesn’t have the be complicated. Wealthy people don’t have some secret you don’t. They just do things that most people aren’t willing to do.
If you want to get serious about improving your financial situation, being better with money, and enjoying more of it, here’s what you need to start doing:
to start doing:
1. Tracking Your Spending And Sticking To A Budget
Yes, it sounds super basic and simple – and it is. Certainly, It’s also a fundamental aspect of financial success.
Your cash flow (that is, money coming in and money going out) is a critical component to your financial life. If you can’t master it, you’re not going to be able to increase your net worth.
Start by tracking what you earn and spend. Do you live within your means, or are you in the red each month? If you live within your means, how far below your means do you live?
You need to live as far below your means as you can, While you widen the gap between what you earn, and what you actually spend.
A budget is the tool you can use to make sure you keep your spending reasonable over time. It can also help you prioritize your spending according to your values, because you can spend more freely on the things you truly care about — and skip (or scrimp) on the stuff that doesn’t matter as much.
2. Saving And Investing A Large Percentage Of Your Income
For most people, investing and earning compound returns is the ticket to wealth.
If you want to follow the traditional path of working until you’re almost 70 years old, then retiring for a few years to enjoy some basic comforts before you pass away, you can simply put away about 10 to 15 percent of your income in your retirement account and you’ll likely be okay.
3. Making More Money
Saving and investing money only works when you have money to begin with. You can only reduce expenses so much before you need to look at the other side of the equation: earning more money.
Many people don’t even consider this because they feel the numbers on their paycheck are somewhat out of their control. But that’s not true. You can play an active role in determining how much you earn every year.
The right tactic for making more money looks different for everyone, and depends on your goals, needs, challenges, and opportunities. That being said, a few ways that might work for you include:
-Negotiating for a raise after taking on more responsibility at work.
-Changing jobs and seeking a higher-paid position (and negotiating your starting salary at the new company).
-Starting a side hustle, or freelancing on the side of your day job.
-Working for yourself.
4. Accepting Risk
Finally, Working with people who refuse to take any risks with their money is losing?Likewise, they refuse to invest in the market because the thought of losing even a single Cedi is too much.
The problem is, any investment comes with some degree of risk — and there’s a relationship between risk and return. You have to accept some degree of risk if you hope to earn a return on your money.
Not to mention, So even sitting on cash comes with a lot of risks. You risk losing purchasing power to inflation, you risk opportunity costs associated with all the time you spend outside of the market, and you risk not being able to save enough cash on your own to meet your goals.