Even though the world has been undergoing a change at quite a rapid pace, and everything does seem completely different from what we witnessed only a few years ago, some things are still quite time proof. In that sense, financial management as a discipline does have some underlying principles that are extremely relevant even today, as they were some 50 years ago. In spite of there being so many new avenues, financial products and ways to earn more money and turn wealthier today, the key to sound money management rests on the same principles that were applicable years ago at our grandparent’s time.
Today, we keep complaining about rising expenses but fail to realize that people in earlier times had greater dependents and more responsibility with lesser avenues. Their success boiled down to their robust core principles of financial management. Just like my grandpa, who raised four successful children, including my father who is a doctor, only because of his sound financial decisions. Feeding a large family was not easy for him, but he made it possible with his prudent decisions, including saving and investing money from time to time.
With that, here are 7 valuable lessons from my grandfather that can help you lay a strong base towards building solid wealth –
1. Save Something No Matter What
Saving is essentially all about prioritizing your future over meeting your whims and fancies of the present day. Even if you feel your income isn’t particularly handsome, if you sit down and analyse where you spend, you’ll always find some room somewhere to save.
It’s quite common to find people today, saying they’re unable to save because their income with the rising expenses doesn’t permit them to do so. However, that’s not necessarily true, as people in earlier times always managed to save whatever their income was, with having much larger family sizes. Prioritizing is all that’s needed.
2. Invest First
Chasing quick cash is something that has never been the strategy of any sound investor, including my Grandpa. The only time-tested way to turn wealthy is to save and invest continually. Doing so puts to use what you have and helps you grow it. The more you manage to save, the faster you’re likely to turn wealthy. Hence, just saving is not enough. Investing meaningfully is key.
3. Avoid Risks That Are Unnecessary
You must make it a point to avoid all those financial decisions whose risk element costs you your peace of mind. If you find an extremely lucrative growth prospect, but it makes you feel quite uncomfortable in terms of dealing with the probability of a loss, it’s best to avoid such a situation. The decision could be anything from changing to an unstable but high paying job or investing in a particular asset or project. If it doesn’t let you sleep at night, it’s never worth it.
4. Postpone Non-Urgent Purchases
It’s very important that you don’t spend your money on things that are not absolutely essential and can be postponed. Today, our ever-increasing desire makes its way to shelves every single day. Naturally, as someone earning and capable of buying, you can feel tempted. However, if you give in to your temptations with every new gadget, car or luxury items, financial stability and building wealth can really take a backseat.
5. Don’t Jump into Everything That Looks Flashy
You must make it a point to make a few good solid investments and stick to them patiently over the long-term instead of hopping between assets all the time. Just like the consumer world glitters with new options, the investment world too has new financial products making their way every day to sway people into investing in them. For instance, the sudden rising tide of cryptocurrencies, the new and fancy real estate projects and so on. However, turning truly wealthy is about making the right choices in an informed manner, and sticking to it. Jumping around will never help in the long run.
6. Mitigate Risks to Your Wealth and Life with Insurance
Disasters and unforeseen situations are something beyond the control of any person. In order to prevent that from hitting you, you must transfer the risk to your accumulated wealth with proper insurance. Just as it is important to build wealth, it’s equally important to protect what the assets you have got, which includes your life, health, properties and cars.
In that sense, even how boring and conventional buying insurance may feel like; you must not skip it and comprehend the need for various types of insurance in India. Most importantly, you must financially secure the future of your loved ones by purchasing the best life insurance in India.
7. Enjoy Life, But Without Spending Chunks of Money
The only way to enjoy life is not by giving into consumerism. With the seepage of advertisements and rise in aspirational purchasing, having a good time has become synonymous with spending money on expensive things. When you do something like that, you lose a lot from your bank and probably end up with something that is not redeemable or loses its value over time, with only short-term gratification value.
Wealth undeniably is the greatest motivator, negotiator and source of power, but only if you manage to build it for yourself. Follow these tips to cultivate financial wealth.