As a young boy, I had an informal but serious conversation with my dad as he told me about wealth. I wondered why he was telling me that as a young boy- probably because I was a male child that will grow up to be a man and breadwinner of my family. I kept his words in my heart though I seem not to understand the whole counsel in detail until later in life when I began to earn money.
I remembered he said that money is like a bird that flies away if you don’t care for it properly. This is to a large extent true so I am writing on how to create and sustain wealth today. I have set a foundation for this blog in my last post. Click here to read if you have not seen it.
Wealth does not come to a man by chance or by coincidence. Irrespective of if you were born to a wealthy or poor family, these principles are universal- you have to learn how to create and sustain wealth or else you might be with an empty purse in the long run.
First, let us look at some motives for holding money.
Three motives for holding money
- For day to day transactions.
- Precautionary motive- for unforeseen circumstances. For instance, couples are counseled to set an amount apart for unforeseen circumstances during labour and delivery of their baby.
- Speculative motive- taking advantage of a situation. For instance, a property might be put out for sale at a ridiculous discount for one reason or the other.
Seven Principles of Creating and Sustaining Wealth.
These principle does not respect your status. You get a good result when you follow the principles and you have the other side when you sideline them.
There was a man who was a prophet and who was known to fear God but he was poor and head- deep in debt that when he died, his children were to be sold into slavery by his creditors. The cause of his death was not stated but it is possible he died of poverty. 2 Kings 4. Wealth is not about spirituality but about following the right principles. It is said that God has given us the power to make wealth. Deut 8:18. It wasn’t stated that He has given us wealth but the power to make wealth and that power is the principle and idea he has given us to create and sustain wealth. If wealth is given to a man who does not follow the principles behind wealth, such will lose the wealth irrespective how much the wealth is.
Of course, in all we do, we should acknowledge and honour God with our substance because even with the principle there are some things that are beyond human control that can destroy wealth e.g. natural disasters, pest and diseases, fire outbreak etc. so in all put all things in the hands of God.
It is time to look at these principles. These principles do not promise instant wealth but a growing wealth that can endure.
1) Pay yourself at least 10% of your earnings. Save this. Of course, before you can pay yourself, you need to earn first, therefore, have a source of earning and then pay yourself at least 10% of it. Place yourself on a monthly salary.
2) Control your expenses not to exceed your earnings after paying yourself. Human wants and appetite are insatiable therefore you need to discipline yourself. There are always alternatives to what you want. For example, there are different kinds of clothes or fishes, go for the one that is good with your earning capacity in mind. Do not go into debt as much as you can especially debt with an interest rate. Be wise!
3) Invest your savings to generate more income. Do not spend what you paid yourself or saved on consumables. You have endured or disciplined yourself to save it, why then use it on clothes, food, jewelry and other things that will not bring in returns. Invest what you have saved so that your money works for you and not the other way round. There are different forms of investment. This is a post for another day but you can read more about investment. Why keep 500,000 naira in a savings account, when you can fix it for a higher interest rate?
4) Guard your savings against loss. Beware of ‘fast money’; gambling; a business that promises a high rate of turnover among others. Do not give a novice your hard earned savings to trade etc.
5) Own your own house to save you the recurrent cost of rent and make it a profitable environment to cater for some needs. For example, you can have a vegetable garden in your compound which will serve as a form of exercise and fun to tend and in a way saves you some cost.
NB- your annual rent for housing should not be more than 10% of your annual earnings. If you are paying an annual rent of 100,000 naira for instance, then you should be earning above 1 million naira in a year. Do you get that?
6) Ensure an income for the future and your family. Think about the future and insure it by making provisions for a stream of income for it.
7) Lastly, increase your earning ability. You may need to add to your skills or knowledge to increase your earning ability. You may need to read on some subject matter to increase your earnings. You have an earning potential that can be explored.
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