Do you ever think about how you can create more wealth? I think we all do! Creating wealth can be illustrated using the laws of money. If you can manage to live through this process of laws of money you are much more likely to be successful. Sadly, most of us will not be able to balance the books and struggle throughout life.
If you have the motivation for gaining wealth but have no idea what the number one step is to get started you probably won’t reach the goals you want.
You always have to start somewhere and that is often the most complicated part of the process. If you can just get going on the process you’ll be able to keep that momentum moving and go forward faster.
Lets take a look at an example of how this can happen:
What would happen if you were asked to pick any colour and paint a wall? Have you painted before or are you a rookie? If you are the latter, would you even know where to start? What tools would you use? How do you prep the wall? How many layers do you apply? If you can just figure how to start the painting process it will be done sooner rather than later and, viola, you have a brand new room!
The purpose of the example is to show that you only have to understand where to begin and actually go out and do it. You can complete anything with this philosophy and it applies to making money as well!
Caught in the grind of the working world, there is a general framework that governs the ability to build wealth. 9 words describe the process:
Use (1) your (2) surplus (3) income (4) to (5) purchase (6) income (7) generating (8) assets (9).
Obviously, wealth creation is all about investing. Scroll down and check out the figure below.
Most individuals try to save a little big of money each month, year over year, decade after decade, in the hope that by the time retirement is eminent they would have a decent fund to survive on.
If you want to make a plan for your future, than you should think about the importance of investing. It is essentially a delayed process for wealth creation. Instead of thinking of the present, they think ahead to future. The goal of this type of thinking is that the money will gain in value in the long run.
Wealth creation is also about increasing your funds but goes about in a different way. Saving part of your income in an account, bonds, or RRSPs is typical of investors, while wealth creation is all about taking the money you can afford and putting it in income-generating assets.
It goes against the grain to say that spending is better than saving. Divvy out how much you have and what you can spend on and this will help you with your achievements of financial success. This is very important to remember.
In order to climb the wealth ladder you need to have some amount of additional income. This additional income comes from all of the luxuries of life that can be eliminated. If you are serious about this means of wealth than you need to question: do I really need to live with that. Things like hobby cars, dinners out, jewelry, etc all need to be cut out. If you are keen on creating a surplus income then keep track of what you spend your income on and trying living without them. Were they really necessary in the first place?
- Whatever you can scrounge for extra money will determine the start of your wealth building journey.
Unfortunately, it is pretty obvious that if you don’t have a job it is impossible to attempt to build wealth. Even if you work a decent job, there may not be the wanted amount of surplus income to help create wealth.
My extra income was way not what you would think possible to create additional wealth!
While this phase of the journey was incredibly difficult, I chose to go with the only option left available: make more disposable money. If necessary, you need to start looking for a better job, in particular, a better paying one! This is key to getting more money in the bank for asset purchasing. For me, it was a formal job that helped me into the world of financial freedom.
You need to ask yourself whether or not you have the answer to how you will add to your income. Are you going to be able handle a second job in order to gain extra income or will you revisit your daily spending to see if you can save money there. Whatever the means, you need to save what you can in order to build wealth.
In order to build wealth, you need to be conscious of spending your money properly. This means you should focus your money in income-generating assets.
In the beginning of your journey, you can’t spend your money on luxury products like holidays or enjoyment vehicles like snowmobiles, four-wheelers, etc.
After working for a while, I took the extra money I made and put it into real estate. I had to take one for the team and stop spending on things I didn’t need. I tried as hard as I could to put my surplus into rental incomes.
Don’t think this will happen right away. I had to spend four years positioning myself into a situation where I could actually use my profit from my first rental income to build wealth and by more assets. Using your additional money from your initial asset and the extra monthly money from your income, this can be used to invest in more income-generating assets.
This is a pivotal moment for all wealth creators. A new phase of wealth acceleration is upon you!
To sum it all up, the law of money stresses a few points:
- Additional money is a means to building wealth.
- You should use additional money to buy income-generating assets and use them to create more assets.
Following this method will help you into a life of financial independence and financial freedom.