As women we are blessed with the gift of intuition and multitasking. Building wealth should come naturally to us with the right education. As we strive to build the home and also create wealth; we need to keep learning and take intentional action daily. Everything we do daily adds up.
Wealth creation has been somewhat termed as a means to gain financial independence and this is a goal many strive to achieve, yet only a few accomplish.
In my banking and legal experience, the most common reason why people fail to achieve this is due to a lack of knowledge about wealth creation, while for others, it is often due to a lack of confidence about creating wealth.
No doubt, many would agree that a successful strategy for creating wealth is to cut your losses short and let your profits run. In fact, according to the Free Dictionary, wealth creation is the “accumulation of assets (especially those that generate income) over a long period of time”.
There are eight laws to wealth creation that I would like to familiarize us with that will enable more women to start seeking to learn and take action to create wealth for themselves and their beneficiaries after death.
Most people are willing to spend years studying to gain a formal education with the expectation that they will obtain a job that will pay enough to enable them to sustain an anticipated lifestyle. Yet when it comes to educating themselves about creating wealth, they never quite find the time to do so. Instead, majority of women seem willing to live from pay cheque to pay cheque or start a small business – and this means they would have to work harder and longer to create the extra income that will satisfy their needs.
The desire for women to have whatever they want now and pay for it later means that many forego the required planning process to ensure they have sufficient wealth in retirement. But this needn’t be the case, as it is never too late to get your savings and investment in order.
Based on experience, I feel that many people do not give enough time or thought to the “laws of wealth creation”. They take it for granted that because they already understand them (informal information either from parents or friends), they do not need to give them the attention they deserve.
But let me ask you – how many of you are truly building a nest egg to ensure you are financially secure in life?
Basic laws to successful wealth creation
Spend less than you earn, Cut down on unnecessary spending, Stop impulse spending, Have a budget and follow it, Save at least 10% of what you earn consistently, Invest another 10% regularly, Invest your disposable income (surplus) wisely, Let your investment breathe (leave your investment alone, let it grow.)
Tell me, which wealth creation rules do you follow on a consistent basis?
Unfortunately, many women do not follow the first rule of spending less than they earn and, are therefore, unable to move on. For those who do follow the first rule and move onto invest their surplus cash, many also fail to do their homework beforehand.
Creating wealth is about spending less than you earn
No matter how small your income is, this is a crucial rule to wealth creation. So my answer to many people who say to me…what I earn do not even take me home, so how do I spend less than I earn? If what you earn does not meet the first rule of spending less than what you earn, then you must seek to earn more; create other streams of income. That way you are able to meet your exigencies and still able to spend less and invest.
Cut down on unnecessary spending.
Some things are important but not urgent. Some are urgent but not important; while some are urgent and important. Put your income into these 3 buckets before you spend what you have or earn.
Place more attention to things that are urgent and also important. Pay less attention to the rest.
Impulse spending
Women are the worst culprit of impulse spending. Most women are moved by emotions and peer pressure. A typical woman can go shopping today and buy all kinds of shoes, bags, clothes and then gets home and feel sad that she has just wasted money. Many shops abroad record 80% returned items are from women shoppers.
Buying on impulse just show clearly that you do not have a budget and even if you do, you lack the discipline to work strictly with your budget.
Budgeting is not just an English word learnt in school, it is supposed to be a lifestyle. Make it a rule to never buy what you do not budget for and if you budget for it, is it part of your bucket of “urgent and important item”?
Usually it is not until the end of the year, like now, that people realize just how much they have earned and spent. But when spending habits are budgeted for, you can know how much you can save. Indeed, budgeting is like a roadmap to achieving financial independence, as it provides you with a plan of attack that allows you to create your preferred reality. It is this rule that is a crucial starting point for a focused investor whose game plan is wealth creation.
Given that you work hard to get your pay cheque, it will be wise to learn to discipline yourself to follow these basic laws of wealth creation. We continue this conversation next week…
Omolara Garuba LLB, BL, PMP
Founder, Global Mentoring Club [Young Lawyers’ Hub]
Talktolaragaruba@gmail.com
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