Secrets To Generating Wealth With A Small Income

Monday, January 11, 2010 | comments

To become wealthy is a matter of dedication and not landing a jackpot. I know of people who would be now financially stable but because of their poor money management skills are deep in debt. Generating wealth is not determined by how much money you make. Making money is good but why do some people latter become poor?

The first thing about generating wealth is watching how you spend your money. Do not just buy something because you like it, make sure whatever you purchase is absolutely necessary. In short, think before you buy anything. The best way to avoid impulse buying is having a budget.

Always operate on a fixed budget. A good budget should contain two categories which are day to day expenses and long term plans. Day to day expenses include things like food, transport and rent. Then the other category is long term plans, these include things like buying a house, a car or education. Make sure you divide your financial plan in these two categories.

When it comes to shopping, make sure you always have a list of the items you need. Also stick to the list, the best way to do this is to carry money just enough to cater for the items on your shopping list. It would be better you carry cash rather than your ATM or credit card whenever you go shopping.

Always live below your means if you want to generate wealth. Make sure you do not spend more than you earn, your expenditure should be low than 30% of your income. At least save10% of your income, this will help you cater for your long term goals.

Financial planning is not easy but it is the secret to achieving financial freedom and thus personal development.

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