HOW DO we create personal wealth? Is it something that we must be born into, acquire through luck, or is it possible to build wealth propensity? These are questions that many persons ask at some point in their lives. Today we focus on five simple strategies for wealth creation:
First, ensure that you are separating wealth creation myths from fantasy. It is not enough to fantasise about wealth creation all day long even though psychologists advise that day dreaming plays a crucial part not only in creating wealth for yourself but indeed in all of your other personal achievements in life. But after the fantasy, wealth creation demands a focused and relentless pursuit of hard work to bring those dreams to reality.
THE LOVE OF MONEY
Second, some persons have formulated a position that perceives wealth as sinful, corrupt and evil. Indeed it is not money that is evil in itself but the love of money that destroys. Another not unrelated position is that some associate wealthy persons with illegal and/or immoral activities as the mainstay of their wealth. But everyone is worthy of wealth that is gained fairly and without hurting one's neighbour in the process.
Third, all of the research that we have uncovered over the years argues definitively that the greatest deterrent to wealth creation is a lifestyle dysfunction. In the same way that it is impossible to plant oranges and reap grapes, it is impossible to live a highly consumption oriented lifestyle and build wealth at the same time.
The two just don't work together. Find someone who is very thrifty and chances are you are finding someone who is 'staying afloat financially' even if that person is not yet completely financially independent.
Fourth, S. Ross Ingram in her book "Wealth Mentality: Programme Yourself to Get and Keep Wealth" speaks to becoming 'Wealth Focused'. You must go beyond a focus of 'not being poor' to one of 'becoming rich'.
CONSUMPTION SATISFIERS
When you think assets think less about consumption satisfiers such as a nice car, beautiful furniture, a big house and more about income- producing assets such as stocks, mutual funds, real estate for investment purposes and so on.
Fifth, knowledge is power and financial knowledge builds your wealth creation propensity exponentially. At the end of the day the amount of wealth you acquire in life is a function of how well you balance the risks. No reasonable person takes careless risks with his/her funds. The financial literature speaks to each person carrying her own level of risk propensity. We suggest that a person's risk quotient is invariably limited only by ignorance.
Case in point: if you are 50 or above and although employed have no nest egg set aside for your retirement, you are in more than a spot of bother here. If you chose to retire at age 65 and live to age 85 or 90 how are you planning to survive the 20 or 25 years of your retirement?
You can't wish away the immense financial needs of those years. At this stage then a conservative programme to take you into 20 or more years of retirement is hardly the sensible thing to do now.
You will need to take some risks here, albeit calculated, if you would seek to retire with some peace of mind. In fact the evidence is that each year some persons die within one year of retirement invariably overcome by their lack of preparedness for this phase of life.
Hopeton Morrison is general manager of St. Thomas Cooperative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com
