Are you still struggling with the financial crisis?

Even me, too!!!

The struggle is real.

We all once in our lifetime tend to think about how we can create wealth from scratch or with little income. The math of wealth creation is simple: earn and save, but it still seems quite confusing.

The financial prosperity is not gifted to all. 

With a proactive mindset and a well-defined strategy, individuals from all walks of life can establish a robust financial foundation.

This guide will empower you with accessible and practical steps to embark on your own wealth-building journey.

Earn:

Generational wealth is not gifted to every one of us, Earning money needs hard work and patience. Try to find your way of earning, either you can perform some work that suits your qualifications or some which suits your necessity. A person can work as a laborer, agriculture field, engineer, doctor, and many more to earn and generate quite a wealth for himself and his/ her family.

There can be two types of income, earned income and passive income. Income that is earned through any occupation is known as active income and the income that is earned through investments is known as passive income. Earning can seem quite obvious but it is compulsory. Without any active income, you can’t even invest which can lead to passive income.

Set Goals and Plans:

What will do with the money that you have earned? 

A lot of things such as funding your retirement planning, school fees, investing in stocks and shares, planning for your son’s or daughter’s marriage, and so on. There is no limit on spending. It is very important for you to plan and set goals.

Start defining your goals. Your goals can be a retirement fund, Fixed Deposits, Properties, or your children’s marriage. Goal setting can provide you with a path to walk and a desire to achieve.  Make use of money to achieve those goals.

Once you have defined your goals, it is important to construct a path to achieve them. You should plan on how much amount of your income you want to achieve your goals. How much time do you want to achieve your goals? Seek professional help if needed. 

NOTE: Financial independence is important. Read here about it.

Save Money:

Goals are achieved through savings. You have to start saving in order to put a start on your plans in the future. There are many ways that can help you to save:

• Calculate your spending: You should always have an idea of what are your necessities and what are your desires. Track all of your spending and ensure any of your spending is for a cause. You can use a register, or a saving app to track and calculate.

• Differentiate between Needs and Wants: For the time start living on necessities, this will help you to track and calculate your spending. Spend on only those things which are necessary. Distribute your spending in two columns named needs and wants. Cut out all the spending that is done on wants.

• Start saving: You should start saving. No matter what amount you are saving, get a habit of saving every time you get an opportunity. Learn to automate your savings. This will help you to spend less every time you need or desire.

Through this, you can start saving and able to save money for your investment and goals.

Start Investing:

Once you have accumulated enough amount through savings, start your investment journey. Calculate your risk capacity and maturity amount that you want at the end of the investment and invest accordingly. Seek professional help if needed. Always tend to diversify your portfolio which provides stability and protects your funds from future economic downturn.

Places where you can invest:

Stock Market: This investment option carries high risk/ reward.  Often chosen by those who want high reward but it comes with risks. The stock market is very volatile and unstable. You can choose this area as your investment when your risk-bearing capacity is high.

Mutual Funds: These are the pool of shares that are pulled together to provide you with a diverse yet high-reward portfolio. This investment option is perfect for those who want to invest less but want a stable yet medium return. These funds are handled by professionals.

Bonds: Bonds are backed by the Government. When a company or PSUs want to raise money, they often raise bonds. You can buy those bonds and the company will pay you interest for a certain period. After the tenure is complete, the company will return the principal amount. It is considered safe and less risky.

Conclusions:

Now, still confused with how to build wealth. Generating wealth is a slow process. You need patience and a regular spending habit to achieve some certain wealth. Wealth can be generated through income, which needs to be earned. So the first thing to building wealth is to earn.

Even after all that, if you are still confused about how to start or where to start, you can contact Divadhvik: Your own financial friend.