Growing wealth has been the goal of many since time immemorial. A simple way of putting it is this: You either have to work for it, or learn to work for it. There is no such thing as an unearned gift. So if you were going to ask a rich relative, for example, regarding some simple rule for growing wealth, the response would likely be something along the lines of, “Do what you love, and the money will follow.” True, there probably isn’t a lot that I could teach you in the way of rules for building wealth, but I’d like to touch on a few of the most critical areas.
One of the most important lessons I can provide any reader with regards to growing wealth is to have a good handle on how your money flows through your life. This includes both your earning potential, and the way you spend it. If you’re not careful, you can easily start spending all your money, and be in debt for the rest of your life. The two types of wealth you should be concerned with are your income, and your net worth. Here’s how to understand each one:
Earning Money – First and foremost, your main asset, should be your own personal money that you put to work each and every day. Once you have built up a little money, you can think about investing it. You can take out a small loan, use it to invest in business, or save the money for a rainy day. Many people today think about saving their money instead of spending it, and this is a great strategy when it comes to growing wealth. When you invest a portion of your income, you can also potentially earn a higher tax return than you could if you simply paid taxes at the normal tax rate, and spent the same amount of money that you earned, but invested it differently.