Richness or wealthiness is a State of Mind. It is a very Personalized thing. You can’t compare each and every person in the same set of rules to know how rich or wealthy he/she is. Richness word is not only associated with Money but it has many parts too. A person can be called rich by his/her beautiful thoughts, by his/her nature, by his/her generosity, and by his/her kindness But unfortunately in a modern society rich and wealthy word is got associated only with MONEY.
In my opinion, I feel rich myself when I achieve financial freedom.
Financial Freedom is that state of mind which can be felt when you are totally worry-free about your finances. You stop thinking frequently about money matters in the back of your mind.
- State of wealth is when one should be able to plan and unplan anything pertaining to money anytime if an emergency struck. For example
- If sudden job loss occurs am I able to provide the same kind of lifestyle to my family for the next 1 year or until I get the same paying Job?
- If a medical emergency happens would I have adequate health insurance and if any more money needed am I be able to handle that cost without being much bothered?
- If I got temporary disability by accident and not able to be in the active working life for some time even then I will be getting regular monthly income to take care of my monthly expenses?
If the answers to these questions are YES then I am rich.
Apart from emergencies
- If I am able to achieve all my short term, medium-term goals, and long term easily then I am rich.
- If I can decide my retirement age by myself then I am rich.
- If I can maintain the same kind of lifestyle even after my retirement then I am rich.
- In my lifetime If I never ever have to ask for monetary help from any of my friends and relatives then I am rich.
- And lastly, if I can live on my own term in my retirement period too with dignity and pride without being financially burdened on my children then I am rich.
Is there any secret formula to multiply your wealth?
The answer is YES if you have
# Patience and belief in long term investing as well as
# If you are consistent and focused on investing
The answer is NO, strict NO if you want
# Quick money,
# Blindly investing to doubling the money in a very short period of time and
# Running behind return without analyzing the underlying associated risk
I daily work towards my financial freedom which leads me to be rich. Financial Planning is a continuous process that leads you to mental peace and hope for a better tomorrow.
You can also follow the following pointers in day-to-day life which can lead you to be RICH.
- Save before you spend. Create a separate account where you can transfer the stipulated saving amount on the first day of the month from your salary account.
- Start it right now: Action is most important than thinking. Set aside 20 to 30% of your income on the day of your paycheque in the separate Investment Account every month. Never touch it. Keep and forget. Start investing through it.
- Decide your saving rate and be firm in implementing it every month. One should save and invest at least 30% of his/her salary. According to your age and risk profile you can have an asset allocation of 70% equity and 30% debt if you are young or 60% equity and 40% debt if you are in the mid-40s.
- Make your monthly budget. Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. The budget will help you to plan your spending and limit overspending.
- Categorize your expenses. Expenses can also be categorized as Needs and Wants. But for a healthy financial life, one must understand how to segregate needs and wants. Learning and understanding the difference between Need and Want makes things simple. We can easily come to know where we spend unnecessarily. This exercise helps us to alter our spending pattern and ultimately increases our savings.
- Never get into the debt trap. Please never take any expensive loans to fulfill your aspiration. The debt will hamper your saving.
- Create multiple streams of income. NEVER rely on only one source of income. You must find ways to create income while you’re not even there
- Be patient and focused in investing: Patience pays off in the long term. Making saving and investing a habit requires a lot of patience. When you just started to invest keep the targeted amount of accumulation in mind. And stay invested in it patiently.
- See your investments grow. Review your investment portfolio and check your progress every year. Not only will this help you stick to your personal financial plan, but it also helps you identify and fix problems quickly.
- Last but not least, GRATITUDE. You must be grateful in every state that you’re in. Always focus on what you do have not what you lack. Give back to others, whether through money, time, or service. And this is called being really RICH.
Last thought:
Building wealth or Becoming Rich doesn’t happen by accident. We need to plan things meticulously and implement those daily systematically.
Financial Independence is available to those who learn about it and work for it.