Developing financial management know-how, skills and discipline will certainly affect the quality of life we enjoy. It determines the quality of education and care we give our spouses and children, as well as how well we can care for our parents, in-laws, and others around us. It also influences how well we can give help or support good causes in our community.
Below are practical steps to make, manage and multiply money.
1. Multiple sources of income: The first step towards wealth creation is to have multiple sources of income. This requires developing different skills, and the capacity to solve problems and create value. I have found out that highly successful individuals, organisations, and nations often have multiple sources of income – earned, passive, and portfolio incomes.
Passive income can come from rentals, dividends, royalties, or capital gains. We must keep asking the questions, how can I increase my income? What skills do I need to possess to improve my income? What capacity must I gain to earn more? The advantage of having many taps where money flows into your account is numerous. But the obvious one is that in case life happens to your major source of income, your other sources of income can help you survive with your family. Our expenses are multifaceted, as we grow older, family responsibility keeps growing. Having a multiple sources of income mindset and taking practical steps on this idea can help your income increase as your expenses increase.
2. Saving for investment: Based on personal experience, it seems immediately our income increases, our expenses find a way to increase. So, we must be intentional in saving for investment. It is easy to improve our taste, standard and lifestyle as we make more money, and difficult to save more to invest in long-term returns, rather than focusing on instant gratification. But developing the habit of saving for investment is a must, if we want to achieve financial freedom and create enduring wealth. The discipline must be implemented, regardless of our income.
I always tell young people to pay themselves first every month before they pay others. It is a must for us to pay others for transportation, housing, healthcare, food, communication, entertainment, and other necessities. However, we must learn to pay ourselves first. You can also make it automatic saving through various arrangements that suit you.
3. Invest in your future: The guaranteed way to multiply money and make your money work for you is to invest it in assets. If I want to use one word to represent financial freedom, that word will be “ownership”. Wealthy people and families own assets that take care of their expenses and pay for their lifestyles. To achieve financial success, we must invest in real estate, businesses, commodities, or paper. We must develop a portfolio that has different forms of assets.
Buy lands, build flats for rent, flip houses, start a successful business, and invest in a promising start-up. Buy shares, and government bonds, and invest in gold or oil. It is also important to invest in yourself regularly. Read voraciously, learn practically, and act fearlessly. Your personal development will influence your financial decisions that will shape your financial success.
4. Lead a simple lifestyle: I strongly believe we can all live within our means. Our noble prophet Mohammed led a simple lifestyle. Islam frowns at wastage, exuberance, and show-off, but it promotes probity, discipline, and moderation. The essence of wealth creation is the freedom that comes from having the means to live a life based on our terms and our ability to support a worthy cause.
One of the most common financial mistakes many people make is to waste resources to impress people who do not really care about them and their families. I believe the essence of wealth creation is to give, grow and show gratitude to people who have supported us in the journey of life.
Building and sustaining wealth is not a day job, it is a long-term effort. It is also not easy; otherwise, everyone would have achieved financial freedom. It requires financial insights, planning, and discipline. It calls for short-term sacrifices, long-term thinking, and grit to desire fervently, believe correctly, and expect consistently. It is first an inner job of mental shift, followed by hard work and commitment.
ACTION PLAN: Have multiple sources of income. Save for investment. Invest for the future and lead a simple lifestyle.
AFFIRMATION: Every day, in every way, I am getting better and better. I am blessed and highly favoured.
Sesan Kareem is the founder of HubCare Health, www.hubcarehealth.com, and the principal consultant of SK Institute, www.sesankareem.com.ng
