Everything’s possible; you can meet your financial goals and create personal wealth. If you select to budget, save and invest, you can pay off debt. In addition, you can send your child to college, buy a comfortable home, start a business, save for retirement and put money away for a rainy day. In other words, all these goals are within your reach through budgeting, saving and investing, and by limiting the amount of debt you incur.
For individuals, net worth is the most common expression of wealth, while countries measure by gross domestic product (GDP) or GDP per capita. Some people consider themselves wealthy because they own and live in a very expensive house, travel around the globe and they’re able to pay their bills at any cost on time. People are said to be wealthy when they are able to accumulate many valuable resources or goods.
How Can You Acquire Wealth?
Many people who are wealthy didn’t build it overnight because they got rich by setting goals and striving to reach them. Building wealth requires having the right information, planning and making good choices. This article provides basic information and a systematic approach to building wealth.
A personal wealth-creation strategy is based on specific goals. In preparing your goals:
* Be practical
* Set up time frames
* Devise a plan
* Be flexible because goals can change
Save and Invest
The amount of money that is left over after personal expenses have been met can be “positive” only if you are financially prudent. On the other hand, if you only tend to rely on credit and loans to make ends meet, you will have “negative” savings.
By investing, you allocate the money you save to work making more money and increasing your wealth. An investment is anything you get for future financial gains or benefit. You can increase your investments by generating income (interest or dividends) or by growing (appreciating) in value. Income earned from your investments and any appreciation in the value of your investments increase your wealth. After you have budgeted and identified an amount to save monthly, this is where you are going to put your savings.
The Language of Wealth Creation
* Assets – A wealth-creating asset is a possession that generally increases in value and provides a return
* Liabilities – Also called debt, this is money you owe, or your bills. Some examples: car loan, student loan, medical debt.
* Net worth – Net worth is the difference between your assets (what you own) and your liabilities (what you owe). In other words, net worth is your “wealth”.