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The Secret To Financial Growth

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Financial growth is the ability to improve your finances to attain financial freedom.

You can be forgiven if financial freedom is mistaken for only being rich.

It simply means being able to afford a lifestyle you want without struggles or borrowing – to achieve such a feat while being debt-free and able to have savings.

READ ALSO:Reportedly Binance Acquisition Agreement With Gopax Failed

Unfortunately, this reality is beyond the reach of most people.

Statistically speaking, about one out of ten Americans believe they have gained financial freedom, showing that many Americans are enslaved by their financial struggles( Invest ).

Let us look at the practical steps to grow finances.

Basic Principles Of Financial Growth You Need to Know

  1. Spend less, earn more: We need to control how we spend money and ensure we only spend what we make.
  2. Avoid debt-producing assets as much as possible: When acquiring assets, one should focus on the type that generates revenue, not those that require you to spend money, termed liabilities.
  3. Please educate yourself on finances: Today’s world has the internet at our fingertips. The importance of following up on finances must be balanced.
  4. Understanding risk factors in investments: Spreading investments reduces severe impact when things don’t go according to plan.
  5. Income diversification: Our source of revenue shouldn’t be restricted to one. It is paramount we find other ways to improve our earnings.
  6. Make Your Money Work For You: Investments are the way to go when considering making money from your money.
  7. Organize your finances: When we make time to follow all our finances, it goes a long way in wealth creation.

Overview Of Basic Steps In Wealth Creation

Savings:

  • This is the first “baby steps” to take when financial freedom is the goal. You need to understand no matter how small your income might be, pay yourself! Putting money aside before making any other expenses is the foundation of creating wealth. You may be concerned about how one can have savings when his income can barely meet their needs. Don’t fret; there is a way.
  • We can set a certain amount aside for savings depending on the income. As I previously pointed out, it does not matter how little the earnings might be. If a shoe repairer makes an average of 10 dollars a month, he should put away a tenth of his earnings, that is, 1 dollar every month as his savings. Despite struggling to make ends meet, he can survive on 9 dollars. He may not even notice the slight reduction in money available for expenses. He can also adjust his spending a bit to accommodate the new budget.
  • The shoe repairer will be pleasantly surprised when, after a year, he sees 12 dollars in his savings. This will encourage him to continue paying for himself. Savings have many pros, and no cons that are known. They serve as insurance for unforeseen circumstances. It goes a long way to reduce the possibility of borrowing, as one can solve immediate crises from savings.
  • There are lists of software that can help one save and monitor expenses. According to Bank rate, there are eight software that can aid one to have control over their finances and ultimately make it more convenient to make savings.

Investments

  • The next step after savings is what to do with the money realized from savings. In a book titled The Richest Man in Babylon, the author George Samuel pointed out the importance of multiplying our money; in his words, our money needs to make money. We need to find the right sources to invest and ensure our money doesn’t fall into the hands of fraudsters.
  • The most trending investment platform is cryptocurrency. The risk factor is very much in this sort of investment, which is why one needs to study before knowing how to go about it. The dividends of any investment are determined by the percentage of risk involved. The bigger the risk, the greater the rewards. Here are some stats that might be interesting to encourage you to invest in crypto.

World Stats On Cryptocurrency

  • Crypto market revenue is projected to reach US$37.87bn in 2023.
  • An annual revenue growth rate of 14.40% is expected, resulting in a projected total of US$64.87bn by 2027.
  • In 2023, the average revenue per user in the crypto market is US$56.19.
  • The highest revenue recorded is in the US in 2023(US$17,960.00m)
  • The percentage of new crypto participants is expected to hit 12.5% by 2027 compared to 8.8% in 2023.
  • The number of users is expected to reach 994.30m by 2027.Source (Statist )
  • Never put all your eggs in one basket. For a less risky, diverse platform, one may consider Exchange-traded funds (ETFs) regulated by government bodies with security laws. Statistics show that in the US, $5.4 trillion is invested in equity ETFs, with another $1.4 trillion in fixed-income ETFs. It’s less in Europe, where $1.0 trillion is invested in equity ETF and $0.4 trillion in fixed-income ETF. In Asia, it’s $0.9 trillion and $0.1 trillion, respectively.
  • Consequently, this resulted in 32% of the stock market in America invested in ETF, 11% in Europe and 13% in Asia in the first quarter of 2023. Source (Wikipedia ).
  • ETF is also useful in cushioning the effect of inflation from local currency when the recipient invests in currencies outside their local currency.

Diversify Your Income

  • Investments are not the only things to diversify. Our primary source of income needs to come from more than one place. It is almost impossible to get rich from a 9 to 5 job. Most rich people in the world are running their own business. Examples are Bill Gates(Microsoft) and Mark Zuckerberg(Facebook). Find a business you can start, no matter how small. It could be an Uber driver, a freelance writer, or anything you are good at that has demand in the market. Improve your skill set.
  • It is extremely difficult to get rich on a salary job because the employer is a business owner. At the same time, the employee is paid to actualize the goals of a business owner.

Manage Your Debt

  • Uncontrolled debt makes it extremely difficult to widen your profit margin. It’s a liability we can’t afford to have. It’s best to avoid it altogether. If not, at least manage it to the barest minimum. The first step is to live below your means. Being frugal in your spending will help you to avoid unnecessary expenses.
  • Another way to manage a debt crisis is to seek the service of a nonprofit debt management organization with a license. Plan a strategy to offset your debts with little deposits within a specific time interval.

Avoid Debt-Producing Assets

  • One common mistake most normal folks make is to acquire assets without considering the financial implications those assets may have. Certain assets force the owner to spend money with little to no revenue generated. Such an asset can become a liability. A classic example is a car. Even when it has no mechanical or electrical issues, money is spent on gas(fuel) and over time, the cost of maintenance creeps into the budget because of general wear and tear. The same can be said about buildings, too.
  • Do you remember the concept of spending less and earning more? Exactly. To achieve this with such liability assets, put them up for business. With cars, you can either lease them out to companies or individuals who need the car to generate revenue that will counter money spent or become an Uber driver. With buildings, you can either lease, rent or sell them at a higher price than what it costs to erect them.
  • At this stage, venturing into real estate is a way to diversify or improve one’s income.

Real Estate

  • Estate management is lucrative and involves rentals for self-storage facilities, mini-warehouses, apartments, and other buildings. Research shows it’s quite a profitable venture. According to Small Business, real estate practitioners or managers make a profit margin of 17.4%, while agents and brokers have a profit margin of about 14.8%.
  • Some of the richest men in the world are into real estate. We have men like Donald Bren with a net worth of $15.5 billion, Sun Hongbin at $9.2 billion, Stephen Ross at $7.6 billion, Sam Zell at $4.8 billion, and Leonard Stern at $4.5 billion. These are the top 5 richest real estate investors in the world in the year 2023. Source (Property Dome).

Final Thoughts

Wealth creation or growing our finances takes time, patience, discipline and determination to nurture. There is a process and certain steps that shouldn’t be ignored to escape being a slave to financial struggles.

Financial stress or struggles are known to hurt mental health. Problems with finances have been a contributing factor to depression.

Two research studies conducted in 2013 and 2014 examined the connection between debt and mental and physical health.

The conclusion was a significant relationship between personal unsecured debt and increased common mental disorders and suicidal tendencies. Source( National library of medicine ).

Frequently Asked Questions

How can I make money without stress?

The moment one understands how money is made, it becomes easier to make it. It’s all about skillset. What goods or services are in high demand in the market? The moment you figure that out, the better it becomes for you. It directs one to know which skillset to improve on.

How can one avoid spending on impulse?

Most people spend money on impulse, but this could create an opportunity for you. When you send money on impulse, ask yourself why you do so. Do a study on things you spend money on. Then consider creating a market from them for people like you. Knowing what’s on-demand is very important in knowing what to invest your savings into to generate revenue.

How can I protect my investments from fraudsters?

Conduct thorough research on the investments you want to divert your funds into. Make sure they are authenticated and are reliable. Study the business platform to know the loopholes and how to navigate them.

 

Source

CNBC  

Invest  

Quicken  

books free  

Statist  

Wikipedia  

Forbes  

Bank rate   

Invest  

Go banking rates  

National association of realtors  

Small business  

Property Dome  

National library of medicine  

Authentic education  

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