In our continuing series on wealth generation and management , today we focus on how to develop correct money blueprint. We are what we do repeatedly. Our money habits developed from our childhood. Much of it was installed subconsciously by parents and caregivers who did not know better. We need to disrupt and change this blueprint
The road-map to wealth is long and tedious. It does not come easy. It is possible to fall into money by luck . You can win a lottery jackpot or inherit money. You can also marry into money. But to create wealth from jackpot money is hard work. This is why almost all those who win lottery get broke in a short while. This also happen to those who inherit wealth. It is for this reason that wise people create trusts to safeguard their wealth.
Life comes in seasons. Our first season in wealth start when we are around 10 years. This is the time when we start interacting directly with money depending on our background. It comes when we are in upper primary with money from parents. At this age, we usually receive money as gifts, rewards or tips for a job well done. This is important because it motivates the recipient to work harder in order to receive more. It sends the message to the brain that working hard is a sure way to earn money. This is how money blueprint start forming.
Those who go to boarding school get better exposure with pocket money. This trains them early how to scale money for a season. They learn that If you spend recklessly, you become broke and miserable .Some smart kids start to save early and even open a cub account. There are parents who shower children with money as gifts without showing them the process of working to earn. Earning should always be preceded by doing some work. Show the young ones to appreciate work and be happy with the rewards for their hard work. Showering them with easy money creates dependency.
It is important to know from an early age that money is affected by inflation and learn to invest to ensure continuity. Show the young ones how to spend part of the profit not the principal. This is the correct mindset for wealth creation. It prepares them for wealth multiplication and accumulation stage.
The money earned directly as compensation for labour or goods is seed capital. The rule of the thumb is to use part of it to pay for crucial overheads only. We should resist temptations to live in luxury from this income. The source can dry out and you become desperate.
Save as much money at this stage as your can and invest to grow your seeds. Reinvest the profit you make until you have made a critical mass that you can invest in passive income streams. The goal should be to eventually generate more money than your recurrent expenses.
It is the surplus you make from your investments in passive income streams that you use to pay for your luxuries. This insure you against any unexpected shocks where you earn your primary income- like you lose your job or the business you do hit head wind. Your life style will still continue as normal
The money earned from passive income is called residual income. Anyone who does not have residual income should resist spending on luxuries. Refuse to buy a car that consumes the money you should invest. When buying a car, consider the running expense on top of the buying price. Do not spend your seeds on luxury items. Resist to buy a smartphone with your primary income. Remember it will be costing you bundles. Instead of a mortgage, invest your money to grow it until you are able to buy that house cash from your residual income.
What keeps most of us poor is we consume all our seeds instead of planting them to multiply. There is a logical and clear plan to generate wealth. In these information age, people are starting to create wealth at an early age. In the earlier days this was an exception though it happened. Robert Kiyosaki started his first business at the age of 9 years. Warren Buffet started at 11 years. More examples can be cited but it was rare. This was also applicable in the African context.
In the Kikuyu community where I come from, wealth was expressed in the form of cattle, goats and chicken. I personally remember my maternal grandfather gave me a goat as a reward to taking care of his flock during holidays. My auntie also gave me a hen. I learnt my first lessons in wealth multiplication from rearing goats and chicken. I learnt that acquiring them is the easier part. Taking care of them is a daily activity. You must be patient to see them grow and multiply. The lessons I learnt at this age have formed a solid foundation for my relationship with wealth in my later life.
We will go into practical examples how to create wealth and residual income in the
current economy in our next newsletter.
Keep it here.
With profound regards,
Founder and CEO
Azima Wellness Consultants LTD
Conference Speaker & Corporate Trainer in Total Wellness.