Wealth Creation means having the control and ownership over anything which has a monetary value or has the ability to generate money. Assets can be termed as a type of creating wealth over a period of time as wealth would be created when an asset gets realised and profit (again, wealth!) is earned. As Robert has stated in Rich Dad Poor Dad that “anything which gives profit, is an asset, rest is liability” For e.g. A house is a liability for a person living in it as he is not earning anything out of it, instead he has to pay for its maintenance, etc till the time he sells it at a profit.
Have The Mindset
“If you are born poor, it is not your mistake, but if you die poor, it is your mistake” – Bill Gates.
The veracious quote, quoted by the world’s second richest man gives us an idea that how most of the people desire of being so wealthy but they lack the mindset to actually work for it. It’s simple enough, to get wealthy, you need to think like one.
Having a wealthy mindset is very important when you are looking forward to create an abundance of material goods in future of what you have now. Having a wealthy mindset would mean that one needs to think while spending i.e. be wise enough to know that what is required and what can be avoided. A wealthy mind would not just depend on a single source of income, he would be exploring various alternatives to invest in the right schemes to create multiple source of income.
But don’t be afraid of not having a wealthy mindset. Scientific research suggests that human mindset continues to change even in adults. So, try to develop a wealthy mindset as soon as possible as it is the first and foremost thing towards the process of wealth creation.
You can check out our podcast episode as well on how to start thinking like the rich for a much more detailed and fun discussion on the same.
Process of Wealth Creation
After having a wealthy mindset, you are all set to start your journey of wealth creation. Anyone who aims to create wealth needs to follow a simple five step process which will ensure that one is able to reach his/her financial goals.
Be clear with your financial goals
The first step is to be clear with what and how much you really want. Create a realistic plan to achieve those goals, an easy way could be to start developing healthy money habits which would help you to identify what is important to spend on and will resist you to spend unnecessarily. This step would help to track your progress and will keep you motivated to continue the journey further.
Make more Spend less
Don’t be relaxed if you are able to cater all your expenses easily with your regular income. One should not be thinking like this if he/she wants to become wealthy. A wealthy mind should always find ways to increase its earning potential. Analyse your expenses and you will come to know that there’s so much on which you can cutdown. Be wise enough while spending because the concrete actions taken today will benefit you at a later time.
Savings & Budgeting
Saving money is something that most of the people do not develop naturally. But it is not as tough as what one maybe thinking. The only thing you need to start saving is a good spending plan. To make this plan work you would need to create a realistic budget and be sure on sticking to it. All you need is some reorganising and prioritising. Prioritising your expenses would mean to look in for what is more important to spend on and what can be skipped for the time period. This step will ensure that you are making progress on your long-term financial goal of wealth creation.
Investing in the right schemes
A person with a wealthy mindset would not be investing in instruments like bonds, gold, fixed deposits, etc where there are less returns. Rather, he/she would invest in the financial markets which have the potential to offer higher returns by taking controlled risks, while investing. Investment in equity markets is the best and fastest way to multiply your savings. There are thousands of companies in which you can make investment listed on the stock exchange. Give due importance to Research & Rankings and invest in those businesses which have the potential to reach greater heights with their quality management and have a history of paying high returns.
Be patient and experience the magic that compounding does to your investments
The secret behind majority of people who became wealthy over a period of time is that they remained patient with their investments and allowed them to grow over time. Each and every penny that you invest has the potential to grow year on year. The only thing which makes this possible is the power of compound interest.
No one on this planet knows what the future will bring for them. Thus, it is important to understand and work towards creating enough wealth so that one is able to achieve his/her financial goals in the long run. Sooner or later everyone will reach at a point where they won’t be able to work. Wealth creation is based on the idea that, one needs to start saving and investing at an early age in order to create enough wealth in the longer period so that they are able to enjoy a secure livelihood in the future.