Your Personal Wealth: Learn How to Make Your Money Build

Money is an issue that affects all of us, yet we are rarely taught the basics. Learning to manage it best is key for all of us. So, here is my refresher crash course on what I have learned about building wealth and managing your money.

The ultimate goal is to build your wealth, accumulating assets such as money or investments (your home, rental property, stocks, etc.).

To increase your wealth, you can either increase your income or decrease your expenses, ideally both simultaneously. The variable you can control the most is expenses because you can create wealth with the same amount of income over time if you manage your expenses well.

When you start accumulating more income over your expenditures, you will be able to save so that you can then invest. Make sure your money is always earning some type of interest so that you can take advantage of one of the greatest laws of this world – compounding interest. Compounding interest deserves a bit more explanation since it is such an important force. It is what will make your money grow exponentially. Not everything can grow exponentially, but money, experience, and relationships are some of the things that can. Companies cannot, for example. The interest you earn in one year will become the capital you use the next year on which interest for the following year will be calculated.

Try to find the highest interest rate you can, but what matters the most is that you save consistently so that your wealth can grow over time. The most important concept in increasing your wealth is consistency – the magic of compounding interest will only occur if you are consistent. Do not take money out of your capital to buy a car or go on vacation. Only save and invest.

You don’t have to be the greatest investor of all time, one who receives above-average returns. Average returns are more than enough if you are consistent. Time is your greatest ally, not returns, so the sooner you save and allow compounding interest to take over, the better.

Your greatest enemy is the world of consumerism that surrounds us. It will try to tempt you with experiences and products but stay firm and focused. Let saving your money and watching it grow become a game for you. When you say no to an expenditure, remember that you just protected the consistency you need to grow your wealth.

So, start saving today, time is your friend. Decades down the road, when you have achieved all your goals, you will look back and thank yourself for starting now and building your wealth.