How To Create Solid Wealth
AzimaWellness Talks 22/2017
How to create solid wealth.
Last week we mentioned some reasons we all need to create big money. This is not disputable. Come with me we go deeper to understand this subject of money and wealth better.
Disclaimer …. Today’s article is longer than usual. I want to lay proper foundation to anchor future articles on this subject.
Money is a store of value. We are paid for bringing value to the market place. The person who keeps the money is the one who brings value to the market place. The market is the consumer.
Money by itself is only a medium of exchange or a generally accepted measure of value. It took over over from cowrie shells. Most of us use money as a medium of exchange not as a store of value. As workers, we exchange our services with Money.
The earned money passes through our hands on its way to the owners of wealth.
Example. We work for the owners of the instruments of wealth generation and get paid for our labour/ services at the end of every month. Work is exchanging services or skills for an agreed compensation.
When working, we consume services offered by those who have the formula to bring value to the market place. When we receive our pay end of month, we give part of our earnings to the landlord who provides us with the house we live in. We pay the providers of services like electricity, water, gas and other utilities and services we consume. We pay for utilities like food , garbage collection, school fees and many other services . We use money to fuel our car, pay for insurance and even car wash services . All these are traps setup by smart people to ensure what we earn ends up with them the sooner we receive it. This is the formula we need to learn so that we can set up our own stores of value.
The Bible says it is not how much money you make but how much you keep and for how long it will work for you. To keep the money, you need to set up stores of value that reflect the money you keep.
Money in itself is useless. It acquires meaning/value in exchange of goods and services. This is why 100 US Dollars has higher value than 100 Kenya Shillings currently. The same is true of 100 Kenya Shillings to 100 Uganda Shillings. It all depends on the value attached to a particular currency not the denomination.
The best way to store money is to convert it to wealth.
What is wealth?
It is the abundance of material possession or knowledge. Material possession could be in form of assets like gold, diamonds, works of art, land, buildings or Intellectual Property. It could also be knowledge that is on demand by many people and are willing to pay for it. This is where we say you have a wealth of knowledge.
Azima Wellness exist to teach our people how to translate money into wealth.
To begin with, wealth is a mindset. If you think scarcity, you will not attract abundance. The people who accumulate a lot of wealth are those who believe they have a lot to offer society be it in services or commodities. To become wealthy, all you need do is to be keen to identify felt needs in society and offer solutions to those needs in a sustainable way to as many people as possible for a fee.
Creating wealth starts with gratitude.
Acknowledge that you are capable of attracting abundant wealth while changing lives. God created us to serve mankind and equipped us with the ability to be a solution to their needs. It is in everyone of us. All we need to do to create great wealth is to locate our gifts and utilize them to serve. Money is a reward for service to mankind.
Making money is a game. All games have a formula. You cannot play in a game you do not understand the formula. The reason why the majority of our people struggle financially is because no one taught us the game of money. Instead of being players in the game, we are victims. The game of money is played on us leaving us poor.
The basic rules of money goes like this;
The first money you earn is seed capital. We start to earn in our late teens to early 20’s for those who go to college. At this age, we do not have many expenses. We do not have a family. It is advisable to resist instant gratification and save much of what you earn for investments. Pay your bills with not more than 50% of your income and save the rest in available avenues like Saccos, bank and in any other avenues. Set up a clear financial and a saving plan for your life into retirement and work backwards to calculate how much savings you need to accumulate and what you will do to grow your savings. Example. If your eggs get to 50,000, you will invest in shares to multiply.
The money you save is seed capital. You plant seeds to multiply. If you preserve what you save, you lose its value to inflation. The first consideration with your savings is to ensure you invest it in avenues that pay higher than inflation. There are many avenues to invest your savings. We will explore them in details in the next article.
Make the money you have saved to make more money and keep repeating the process until you make a critical mass to invest in bigger projects. When in your 20’s, be bold to take higher risks. You have time on your side. You can start all over again if you fail. Take failure as a lesson.
The 20’s is the critical decade. Your later life will depend on what you do in your 20’s. Most of us waste this decade only to pay heavily later when we have more critical financial commitments and burdens.
In case you are past this stage and you did not know how to do things right, not to worry. Start where you are with what you have. You will have to start at the stage of multiplication of your savings. Unless you are born lucky with a solid inheritance, you have to start by multiplying your first earnings. We will discuss practical options to multiply your income.
This will ushers you to wealth accumulation stage. Do not multiply and spend. Re- invest your earnings from your investments to accumulate a critical mass. Resist instant gratification like cars, exotic holidays, expensive gadgets, partying etc until you have created multiple streams of passive income. Spend on luxuries (non essentials) from your passive income not from your active income.
It is important to lay out a good financial plan that realistically captures all your financial needs past retirement. Depending on the style of life you want to live, there are varying financial costs to it. Do your maths and work to make it happen. Apply time value of money to arrive at how much it will cost when you project to live that lifestyle of your dream and set up streams of income to generate the income to pay for it.
After wealth accumulation stage, we come to wealth consolidation stage. This is where you divest from investments that are hectic to manage and monitor. This is the time you start planning your retirement. Focus on consolidating your wealth in streams that are easy to monitor in your absence. You have the advantage of experience at this stage. You know better what works.
Finally look for a good lawyer with experience in estate planning. In this day and age of increasing life longevity, we need to carefully plan for life in retirement. You have more than 40 years to live in retirement if you exit at 60 years. The ideal place is to choose to retire earlier and enjoy your life. Invest in personal development to master what you will be doing in retirement. Something you do for fun not for money. This will ensure you live to be 100 years plus.
To be continued in the next newsletter…..
With profound regards,
Founder and CEO,
Azima Wellness Consultants LTD,
Conference Speaker & Corporate Trainer in wellness & Financial intelligence .