Women are generally known to spend their earnings on the welfare of their husbands, children and relations; as such women need to create sustainable means of livelihood and generational wealth.
If you must take a step today, ask yourself some salient questions: What kind of life do I want?, How much do i need to earn to have that life?,
- What mistakes did the women before me make that I have sworn never to make?
Then seek financial education and this should be a part of your family cultures; your children should not be left out.
No matter how small your income is, spending “less than you earn.” is a crucial rule you must follow in your journey to wealth creation.
Last week we started the conversation around how women can create wealth from what they earn. [you can read up from last week, this will give you a better insight to today’s conversation]
Wealth creation is a “journey” to achieve generational wealth; there is no shortcut and it is not a get rich-quick scheme.
Many people miss the benefits of delayed gratification in their quest to wealth creation and as such put themselves on a journey of gathering possession with no value or life skills.
Delayed gratification has been shown to improve one’s; self-control and ultimately help to achieve long-term goals faster and these are critical skills to wealth creation.
The 5th Rule is savings.
Savings
If you get your budgeting habit right, you will realize that you will be able to save at least 10% of your income. (income include what you earn, gifts, business proceeds and others) You should always remember that savings in relation to wealth creation is not the same as the popular saying …”save for the rainy day”.
For women who are focused at creating wealth, savings should be that sacred money you must never touch even when there is emergency.
Savings here should be that percentage you keep every month in other to accumulate bulk money to make a wise and long term profitable investment.
This is different from saving money for a particular activity or event; such as vacation, children’s schools fees, family engagement and others.
Note that for the purpose of wealth creation your savings should be for the singular purpose of long term investment. This will further create another stream of income for you, with a positive net-worth that will safeguard your future happiness and financial security.
Investment
Many people make the mistake of juxtaposing savings as investment. They say things like I have an investment of N1m in my savings account.
Investment in simple terms mean an asset bought. There are tangible and intangible assets. There is misconception in africa that children are the assets; so you see many parents who wait for their children to take care of them at old age, claiming they have invested in their children so it’s payback time. Then the children carry the burden to fending for themselves, their own family and their old parents…the circle continues and as such wealth creation fades away. That could be the same reason why most African countries make little or no provision for the elderly. One of these days, we will have a serious conversation around, government provision for the elderly in Nigeria.
What is disposable income?
Disposable income is that portion of an individual’s income over which the recipient has complete discretion. This is after all payments have been made, so whatever is left as surplus is at your discretion to either spend or add to your investment. Do not waste your disposable income. Spend it wisely.
Next is, the issue of letting your investment breathe (leave your investment alone, let it grow.) If you are prudent enough to be able to invest, then you should be patient enough to let it grow.
There are two simple types of investment. The long term and short term investment. Short term investments are financial investments that can easily be converted to cash, typically within one or two years.
Long term investment are typically for longer years, up to twenty to thirty years. Some of the real estate, being sold off by some young people today, were investments (tangible assets) made by their parents long before they were born.
Einstein referred to this as the power of compounding. When you invest wisely, your money will earn interest, dividends and capital gains. When you reinvest these earnings, it yields additional income because of the compounding effect. Consequently, it is this rule that is the real key to wealth creation.
The next thing is to create a financial plan and take deliberate actions towards building generational wealth. By all means if you are married, please build with your partner, but don’t let it ever be to the detriment of your financial security.
Speak to a certified investment advisor
If you are yet to start any of these, do not beat yourself up. They say whenever you wake up is your morning.
Take action now and share with me the baby step you have made towards wealth creation this week.
I also have free financial planning template for women who are ready to take deliberate steps.
You can send me an email with the subject “Financial Planning Template”
Omolara Garuba LLB, BL, PMP
Founder, Global Mentoring Club [Young Lawyers’ Hub]
Talktolaragaruba@gmail.com
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and then