Wealth building happens the same way as brick wall building. The key to successfully build wealth lies in the word BUILDING.
Consider the process of building a brick wall. First, the foundation is laid with concrete mix, then bricks are laid one at a time by putting one on top of the other, cementing the first before putting on the next on top of it. The reason for the cementing is to make sure the first is solidly held in place before putting on the next.
Building wealth takes on the same process. In the same way a brick wall is laid, you can save to build wealth and/or invest to build wealth. In either case, the key is to start with any amount and continuously build on it.
If you are saving, save to build wealth. If you are investing, invest to build wealth.
Saving to Build Wealth
A lot of people may consider saving as a difficult thing to do. If you are in this category, you probably will be thinking that it is difficult to save after taking care of your expenses, given the little money you earn. Well, saving to build wealth is very simple.
You set aside small realistic goals of how much you will save each month or each pay day. It does not have to be so much as to affect your financial obligations. Decide on just any amount to set aside before you begin spending. Saving before you spend ensures that you actually save. Waiting to spend before saving what is left leaves you with the risk that nothing will be left to save. Believe me, something will always come up that will justify you spending it.
Remember the key, BUILD! the first amount you set aside is your first brick. Save it and cement. To cement it in this case means to leave it, do not take out of it so that it will hold the next one to be added next month. I call this “Stacking on the Savings”.
Continue the “save – cement – save” tactic and you will see your wealth wall begin to take shape. Your savings will begin to grow, and will eventually form a strong cushion for you against short term emergencies like major repairs, health emergencies, new appliances for the home , etc. As you continue to BUILD, you will have built strong cushion for emergencies and can now take out some of your savings to invest for short term or long term in order to build even more wealth.
Investing to Build Wealth
Just like saving to build wealth, investing to build wealth follows the same brick building tactic. Consistently building on your initial investment is the key to growing your investment and building wealth.
Here are two ways you can invest to build wealth:
Reinvest your Returns
Whether you earn returns in form of interest, dividend, cash payment, or stock options, put it back to your investment no matter how small. Roll them over and reinvest, do not cash them out. Cashing out is like removing the cement that holds your bricks.
Add to your Initial Investment
Also, as you add new bricks to build your wall, add to your initial investment. This does not have to be on the same investment instrument. You can diversify to manage your risks. Whether you decide add on the same instrument, or decide to diversify, the key is to continue to add on your investments to grow and build wealth.
To conclude, what is holding you from building wealth? Very little income? If yes, start saving very little of this very little income. Start small, but think big. Set short term achievable goals for yourself. Once you achieve it, you will have the momentum to set and work on the next goal.
