Oooh, increasing your wealth. This is definitely a favorite!
Much of the world really loves the idea of ‘wealth’. It often brings up images of money, piled high – perhaps, like in the recent Hobbit movie, the mounded gold coins and jewels guarded over by the dragon Smaug.
Of course, we may have gone beyond those imaginings and we know that true wealth cannot be measured, and that riches go far beyond money and coins. (There have to be a few out there who haven’t quite gotten this far, considering the number of lottery tickets that are purchased every day, though!)
Regardless of where you are on the dreams of wealth scale, there are some very simple things you can do to increase your personal wealth of the mundane, gold-coin variety, and here they are:
Live beneath your means
No one wants to do this – we want to live far above our means, and often do. From taking out multiple credit cards, to buying cars we can’t afford, to spending just that “little” bit extra on the perfect home, we tend to lean towards the high side instead of the low side. But it’s a fact that those who are extremely well off lived for many years with hardly the best of everything, and often the best of nothing. They drove the old car until it died, flew economy, (or took the bus, or even *gasp! * walked), ate in instead of going out, skipped the bottle of wine, and shone the shoes instead of buying new ones. It is amazing how quickly wealth can accumulate when you’re not accumulating all those little extras that life (or those around us, or the tv, or others’ lifestyles) says we have to have.
Take risks if you can
We say “if you can” because while taking risks is essential to business ownership, you’ve got to consider the level of risk you are capable of handling. Do you have a family? Big mortgage? Other dependents? Someone in the family with an illness? Anything of this nature will affect what level of risk you’re able to take. Some incredibly wealthy people took massive risks when they were young that they’d never take now. Others we know took risks that had disastrous results, and they’ve been paying for it ever since. Sometimes it seems that the world is telling you to take risks immediately and with no thought of the morrow; we’d temper that a bit. (Being accountants, of course, we’ve got to consider every side of the risk argument!)
Spend wisely, and reward well
Just because you’re not overspending doesn’t mean you never buy anything nice. Those who are wealthiest make a real point of setting reward goals and then enjoying the purchase when they’ve achieved a certain level, or finished a task. Whether it’s as small as a new suit jacket or as big as that fancy new car you’ve had your eye on, the important thing is you know and identify the goal. What’s on your reward list? Include easily achievable, low-ticket items as well as the seemingly-impossible ones. You’ll be surprised at what you end up with.
Create multiple streams of income
Ever more popular is having side businesses and passive income. Your parents or grandparents may have worked at one job for fifty or sixty years and then retired, but that’s not the norm now. Many business owners have more than one business, own property, try out a job for a few years, then go back to running their own business. It’s not looked down on, either; in fact, it’s applauded. Having several businesses means you’re successful, talented, exploring options, willing to risk, eager. All good traits for those wishing to do business with you. For a while property was the new gold mine, but some really got burned in that field. Others stuck with it and their mine is producing again. Consider well, research what’s out there, and in particular look at what’s so hot and trendy that almost no one else is doing it. That could be the new Facebook.
Invest the wealth you do have
Whatever level of wealth you have (Smaug-level or Gollum-level), don’t just let it sit there. Get financial advice, review your assets and income and investment opportunities, and let your money get to work for you. Combine this with spending less, and twenty years down the road you’ll be very, very glad you did.
Understand your accounts
The more you understand your profit and loss, bookkeeping, tax returns, sales tax, and how these things are calculated, the more wealth you’ll be able to build. Understanding how these work is the first stage in improving the numbers in them, and your accountant should be able to talk you through this in a way that is completely simple and understandable to you. That’s something we do for all our clients – we don’t simply want them to come in and sign their tax return and go away again for a year. Your business is important to you, your life is important to you, and your wealth is important to you. And so it’s important to us.
Don’t miss our upcoming webinar on Increasing Your Personal Wealth – we’ll address these topics and give some practical tips and stories on how to implement them!