According to Karani Nyamu, building up your wealth in this time and age is a task. Too many entertainment joints, too many things to buy, way too many trends to keep up with. Therefore, building up your wealth for your offsprings or for your future, in general is a thing that not only requires self control but discipline as well.
Karani Nyamu offers some tips on personal Finance and wealth building:
Caring for your stuff
It takes a lot of effort to earn and save money, so when you invest it in tangible or other goods, be sure to take good care of it. A home and car in good condition will command a much higher resale value. Being organized and healthy is also conduscive to wealth creation.
Homes and mortgages
Your home is probably the largest purchase you will ever make. Most of us cannot afford to buy a home outright, so a mortgage is the only option. Consider the perils of home ownership versus renting – maintenance, taxes, and other fees can drain your account and time.
Consider a home versus a real estate investment – sometimes they can be both. Don’t overly commit. This is a purchase where you absolutely want to begin with the end in mind – how long will you live in the home, how long will it take to pay off, can you afford interest rate swings, etc. Some of the wealthiest people in the world have made their fortunes through real estate, but consider you probably aren’t hearing about the ones that have lost their fortunes through real estate. Generally speaking, a home can be one of the best investments you make.
If you aren’t working at growing your net worth, then it may idle out. Be productive in everything you do, your career, your investment choices, researching your advisor, educating yourself, and so on. Every waking hour can be strategically invested into wealth creation. On the other hand, don’t discount that entertainment and leisure is a necessary investment of your time – we all need downtime to recharge our batteries or get gas in our tank.
It would be difficult to build wealth without saving something each month. Determine your commitment to save 10 to 30% of your after tax income. Pay yourself first so that you can focus on the remaining amount to cover expenses. Saving is not just about putting your money in a savings account, it is about putting that money to work in investment vehicles that may return up to double digits in growth over the long term. Compounding savings from your early 20s will result in growth opportunities which are near impossible to achieve beyond your 40s.
Setting a budget is similar to setting a goal – a budget can help you keep your spending on the rails. Consider time and financial budgets. Depending on your financial position, you may want to have a tight or loose budget. A loose budget is a good idea for those that are in a good position, but still want to keep tabs on spending. A budget can also help for bigger financial commitments like a vacation by facilitating making the final decision rather than feeling like you can’t afford it.
Career and income
Your employment income will likely be your largest and most stable source of funds to cover your day to day expenses and wealth creation investments. Choose your career wisely, for some jobs pay much better than others. Compensation may come in the form of salary, bonuses, options, stock, pensions, and investment matching or other. These all need to be considered to give you the full understanding of what your career is worth over 5, 10 or even 25 years.