How To Build Wealth: Converting Salary Income To Investments
If you are like many us who didnâ€™t hail from a wealthy family and you desire to build your wealth from scratch, a tested and proven wealth building strategy to follow is converting your salary income to investments.
No matter how little your income may seem, you will need to develop the habit of saving a part of it religiously. Someone might say they have lots of commitments, such as paying childrenâ€™s school fees, meeting family upkeep, paying rent, supporting extended family members who are in need, etc, compared to their present income. They may therefore think it could only be possible to save when they begin to earn more money or when their income increases.
If you are in such thinking, am sorry to say, you may never be able to build wealth. Thatâ€™s just the simple truth! If you cannot save some part of your â€˜smallâ€™ income, there is no guarantee that you will be able to make any savings even when your income is raised.
What normally happens is that as soon as your income increases, you will suddenly find yourself buying a lot of things, including more expensive things than you were buying before. You will suddenly realise you have to change your wardrobe more frequently and to a higher taste, ride a bigger car, take your children to a more expensive school that befits your new income status, buy a new home, etc.
At the end of the day you will not be able to account for a dollar in your savings account out of the thousands of dollars you may have earned as salary income â€“ and there goes your desire to be wealthy.
Itâ€™s simply a matter of scale. Whatever your salary income is, if you cannot make it a habit to save a fraction of it, you may never be able to save any even when it is increased a thousand times. And you may never be able to build wealth.
In order not to fall into the trap of continually spending all that you earn, month after month, without any savings for wealth building, I will recommend you follow this simple, but hugely effective savings plan:
Very importantly, you must henceforth start taking yourself as one of those items usually on your budget, on which you always spend your income.
In fact, you must begin to pay yourself first, say ten percent of your income â€“ that is, whenever you receive your income, immediately take out ten percent of it and transfer straight into your savings account, not to be touched. Just as you will not go back to your landlord to ask that the rent you paid earlier be given back to you because you are in pressing need of money, you must not take back this savings to meet any expense â€“ consider it no longer your money.
Whatever new expense coming up after you had made your budget for the month or week [whichever applies to you] should be moved to the next budget for consideration.
If you can keep to this savings plan fervently, you will surely be on your way to building wealth. After a few months, you would be amazed about the size of money you have piled up.
Now, what are you going to do with the money you have saved? I will tell you of course. The purpose of keeping some money in a savings account regularly is not for the interest it will generate â€“ far from it â€“ interest cannot make you wealthy. It is for it to build up to a sizeable chunk that you can invest in a profitable venture.
Real Estate and stocks are some of the highly profitable investments you can consider putting your savings into to build massive wealth for you in a couple of years from now. Robert Kiosaky and Warren Buffett are widely known to have built massive wealth from small beginnings from Real Estate and stocks.
But please note: because investments have risk factor attached to them, it is equally possible that you may lose your money instead of making good returns. For this reason therefore, you will need to find and use the services of a good investment adviser or consultant to help you decide on the kind of investments that will create wealth for you.