When thinking of making money, most people confuse the practice of building wealth with getting rich. The two terms are often incorrectly used interchangeably. Building wealth and getting rich may seem similar to you, but they are completely different in the approach. It’s important to understand the distinct differences between them for achieving the right financial goals.
Getting Rich entails… Well, in simple terms…
Being Rich is Reflected by the Amount of Money you Accumulate
It’s actually quite easy to identify a rich person. You would typically assume that anyone who owns fancy clothes, luxury sports cars, goes to lavish events, and enjoys expensive boat rides is a rich person. A range of people who check that list have crossed your mind right now …. celebrities, businessmen, athletes, wall-street investors, and high-earning professionals. It goes without saying, they are the millionaires of the world. Hence, earning high incomes, having a lot of cash in bank accounts, and showing your possessions to the world in different aspects proves that you are rich.
Adding to that, rich people are also high spenders. Given their extravagant lifestyle, they have a lot of hefty expenses. It can also mean having a lot of debt associated with all these expenses. If expenses surpass the income earned, then the money you have doesn’t really matter. Let’s say you make $300,000 a year, but spend almost $350,000 in expenses, then you might seem rich, but you’re on your way to becoming broke. In fact, plenty of celebrities, like the rapper, 50 Cent, have went from being rich and famous to declaring bankruptcy. He ended up with $32.5 million in debt.
This brings us to the conclusion that having a lot of money and owning luxury brands does not necessarily make you wealthy.
What does this mean?
Being Wealthy is defined by your net worth and assets.
It’s easier to identify a rich person over a wealthy one. Why so? Because wealthy people don’t necessarily own the latest luxury gadgets nor do they flaunt their lavish parties. You may be wondering…what do they actually have then and how is being wealthy more important than getting rich? Well, what wealthy people have is… ASSETS. A lot of Assets… I mean like A LOT! Especially in real estate, along with various other types of investments, and of course cash. Accumulating massive assets as such can significantly boost your net worth and build wealth.
Most businessmen like Jeff Bezos, Bill Gates, and the great Warren Buffet are wealthy people. Despite being billionaires, they are known for leading a moderate lifestyle, dressing humbly, and building wealth. Moreover, they believe money spent on showing-off is money wasted. In other words, their high net worth isn’t put intentionally on display for the world to see. Instead most wealthy people focus on achieving financial freedom. It’s actually about the mindset. One thing all these wealthy people have in common is structured planning for the long-term and an entrepreneurial spirit. They set the best examples for promoting building wealth.
So, how can you build wealth?
If you want to build wealth, there are a few things to embrace prior to embarking on this journey. Most importantly, do not fall into schemes that sell you methods about getting rich fast. Big cheques and quick cash seems tempting, but may not be as rewarding on the long run. As I mentioned earlier, having the right mindset is instrumental for accomplishing a fruitful harvest. So, here are the following simple things you can do to get started:
- Invest in Yourself for Building Real Wealth
Yes, as cliché as it sounds… it all stems from your deep mind. Nurture yourself as much as you can, whether by reading personal development books or personal finance education books. My personal favorite is Rich Dad Poor Dad by the famous businessman, Robert Kiyosaki. I couldn’t think of a better example for someone whose financial knowledge is what made him a millionaire. Thus, building wealth not only stems from asset accumulation but also from possessing great financial skills. His book enlightens you about real estate, cash flows, business building, and investing. In short, once you switch your mindset, you foster essential skills required for achieving financial freedom. By doing so, you’re already half way through the building wealth journey.
- Save at Least 15% of Your Monthly Income
The first step prior to investing is saving! Try to save at least 15% of your income every month, regardless how little you make. It’s much easier than you think. Trust me. If you struggle with saving your money, you can set up a saving bank account that automatically does the trick for you. A small sum saved regularly for a long period of time easily allows you to start building wealth. After all, how can you invest in assets if you haven’t saved money on the side?
- Be Smart About Your Spending
The key for building wealth is to avoid splurging on unnecessary purchases and being frugal. As a matter of fact, you should aim to live below your means in order to invest your savings, just like how the big guys did and still do it.
- Invest as Early and as Much as You Can
If you haven’t given it a thought yet, you were supposed to start yesterday. The sooner you start investing, the more you benefit. Investing is one of the best and quickest methods for building wealth. The trick here is to constantly reinvest your returns until you have accumulated the desired sum in the future. When it comes to investing, there are numerous options available. As long as you’re making money work for you, the method isn’t an obstacle.
For this reason, one must perform his/her due diligence and resort to credible investment platforms prior to investing. In case you are hesitant about the right investment choice or you lack huge capital to invest in real estate for example, then crowdfunding is the ideal option for you. Prominent digital investment platforms, such as SmartCrowd allow you to invest in Dubai’s best real estate for as low as AED 5000. Not only do they offer a hassle-free process for you, but they make sure to always educate their audience on having the right mindset to become an aspiring wealthy individual.
So tell me, where are you on your building wealth journey?
A Rich Mindset Focuses on Building Wealth
Remember that building wealth is about setting the right mindset and securing a great future. You should always think about your long-term goals. Focus on investing in long-term assets, such as real estate, and continuously updating yourself on the different strategies and trends occurring in the market. More importantly, seek platforms that are transparent and wealthy in their value 😉