How to become rich and wealthy? - by CA Guddia Prajapat

We have been taught our whole life that money begets money. I personally believe that it depends on habits & behaviors to get rich and grow wealthly. If you don`t find a way to make money while you sleep, you will work until you die. It`s not an overnight process. 

Rememeber, there aren't any get rich quick schemes here. In this article, let us learn how to create wealth using few steps illustrated below,

Save, Save and Save: 
The first step is to save money. Stop spending for unnecessary things. Stop buying products which you don`t need. Remember, you goal is not to look rich, but be rich. Use your cards right, so that you can earn a lot of freebies, earn rewards, get free hotel stays and complimentary flight tickets and so on. Be smart and save money. Try to save 40% of your income. Sounds difficult but not impossible.

Pro tips: 

1. Open three savings account.One for meeting regular expenses, second for emergency and third for savings. 
2. Now the trick is, as soon as You get your salary,transfer the money to these accounts. 
3. Please dont apply for debit card or net banking for third account. 
4. This will stop your spending temptation because you may feel lazy to go to bank and withdraw money. 

Understanding the benefit of compounding: 

As per Albert Einstein "Compounding interest is the eighth wonder of the world. He who understands it, earns it and he who doesn't, pays it." 

Maybe as a child you were told that if you had one penny and doubled it in a year, you would have two pennies. Now, if you had two pennies in Year 2 and you doubled that amount, you would have four pennies. If you kept this process up for a period of twenty-seven years—.01, .02, .04, .08, .16, .32, .64, 1.28—you would increase your $.01 from Year 1 to $1.3 million in the twenty-seventh year. Sounds financially magical, doesn’t it? This is the magic of compounding. You are seeing money compounding at a rate of 100% a year in our example whereas in practical scenario average interest rate is around 8-12% per annum. 

Invest in yourself/Knowledge : 

Investing in knowledge is the best investment. Read, read and read books on the greatest people! Self educate yourself! Learn something new daily. Invest in education. Be a life long learner. For me, getting my Chartered Accountancy certificate has yielded a lot of revenue over the years. 

Stay ahead of competition. While people are busy watching netflix, be busy improving yourself and working on your skills. Stop wasting time on T.V, games & dumb stuffs. Try to stay healthy.  Stop eating bad food! Eat organic. Believe me bad food changes your mind chemistry. 

Invest in appreciating assets:  

There's this famous saying " The wealthy buy assets first and the assets buy other luxuries." Invest in assets which will appreciate in future and start generating passive income. 
For example- Invest in house and rent it out. Property value will appreciate over the years and you will be getting regular rental passive income also. Make money work for you. 

Develop 3 or more income streams:

Never depend on single income. Make investments, to create second one. Take up part time jobs, learn to blog, create affiliates, try freelancing, lend money and earn interest, earning dividends from owning stocks.

Review all your investments: 

Before the end of the year, make sure you take a look at all the investments that you have made and see how they are performing. If some of your investments are not doing well, put them out and reinvest in better performing holdings.

So guys please remember creating wealth isn't about how much you make, it's about how much you save. 

Happy Reading !

Disclaimer : Images are taken from Google

CA Guddia Prajapat

About the Author : 
She is a qualified Chartered Accountant and a passionate learner. Her passion towards finance and taxation makes her articles more interesting. She personally believes that knowledge increases by sharing and not by saving.