To a few people, wealth is the abundance of a particular thing they desire. For some others, it is the measure of value owned by a person, company, or country.
However, wealth creation, in respect to money, means an abundance of money. Wealth creation is focused on making this money in quantity, especially while young.
As a young Nigerian, the pressure to create wealth can be very endearing in our current economy, which can drive us to different schemes and techniques to generate wealth.
You may call yourself wealthy based on the benchmark you have created for yourself. It could be your properties or assets, more like a car, a house, a land, and the like.
This article will enlighten us about wealth creation and how to maximize or utilize different ways to go about it.
Let’s get started.
Table of Contents
What is Wealth Creation?
Wealth creation is a mindset. A mindset that is birthed by intrapreneurs on their way to wealth creation. Wealth creation is a process that involves the accumulation of assets, investments, and resources over time.
As a young individual, you cannot build your wealth simply by earning more money. You create your wealth by investing saved money. This can only happen by choosing investments that align with your financial goals.
To sufficiently build wealth over time, you have to give your investments a lot of time to grow. By allowing your investment to compound, earning returns on both your original investment and on returns you received previously, you are creating room for better returns. Remember, the earlier the investment, the better the financial destination.
Wealth creation does not only entail accumulating wealth; it is about making wise financial decisions and acquiring valuable assets and businesses that can help you build your money in the long run.
Why is Wealth Creation Important?
Warren Buffet (a famous investor) once said, “Price is what you pay, and value is what you get,”. In this context, this implies that savings for investments that eventually result in wealth creation is what is paramount.
We often have short- medium- and long-term goals that we save for, which are means of creating wealth.
For example, Short-term goals could include savings for a vacation with friends and can take a few years if planned properly.
Medium-term goals include saving to buy or build a house, buying a car, and providing for your children if you eventually decide to have one. Many times, these are investment goals and can take 3-5 years.
Long-term goals are the origin of wealth creation because these are retirement savings plans and should be properly planned. For these goals to be achieved, investing in the early stages needs to be taken very seriously.
Our economy as Nigerians does not permit waiting on old homes to take care of us in our old age, so therefore, we have to build our wealth in our young age and also learn wealth management.
9 Wealth Creation Principles You Need to know
Building wealth in the Nigerian economy of today can be very tough, and as a result of that, the right wealth creation principles have to be in place to secure your financial future.
Below are a few wealth creation principles that can help your wealth creation journey:
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Make a plan
Building financial wealth is the first thought, and planning for it is the utmost priority. This simply means identifying your goals, life lessons, and priorities. Also, picturing your life and where you would like to be soon.
This would help you make the right decisions in the present and put you on the right track. You can also employ the services of a financial advisor to ensure the smooth running of things.
Of course, employing the services of a financial advisor could be very expensive. Considering that you are a starter, it can only get better if you can devise a deal with your advisor on a payment plan.
Talking about making a plan, getting the right information and updates help to make your plan impeccable. Subscribe to our newsletter now to get regular information and updates.
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Have a budget
Creating a budget is a very important principle in wealth creation because it is the sole drive to maintain it. By having a budget, your financial plan would be kept intact.
It is also a key factor that helps you understand where your money goes as a 9-5 earner and gives you a clear understanding of what you are supposed to prioritize financially.
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Inculcate a milestone habit for your savings
The average Nigerian barely saves, and this is a major problem.
When we eventually decide to make savings, creating milestones is a very important strategy to put in place. This way, you can be abreast of the situation and make changes where necessary.
For instance, if you are saving, you can plan to have saved xx amount by the time you are 25, xx amount by 40, and so on. This way, you are accountable and are on the right track.
Read Also: How to Cultivate The Habit of Saving Money in Nigeria
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Create an emergency funds account
Emergency funds simply mean money stashed up somewhere and can be used to bail you out in emergency times, mostly in financial crises. They come in handy when unforeseen circumstances require an immediate financial response.
Having emergency funds will help you keep your credit and savings intact; that way, you do not have to touch your investment or savings or even scatter your budget for the month, keeping you on track with your savings goal.
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Stay away from debt
Avoid debt. Debt reduction and wealth management are key vitals when it comes to wealth creation.
Staying away from debt has a lot of positive yields for you as a young Nigerian, and if you are already in debt, reducing your debt should be your utmost priority. It could slow down your wealth creation journey, but it is still a valid action to take.
It is very important to make behavioural changes by being conscious of how you spend to avoid compounding your already existing debt.
Read Also: 14 USEFUL TIPS TO AVOID DEBTS IN BUSINESS IN NIGERIA
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Create an automated savings
Nigeria’s economy honestly does not permit savings; in the sense that you eat as you earn, there is little or no time to think about whether you would like to save or not, and that’s why automated savings are needed.
Creating an automated saving enables you to save when you earn. The money can be debited as soon as your salary hits your account.
By automating your savings and investment, you are eliminating the possible extent of frivolous spending and setting aside money that can result in and enable your wealth creation going forward.
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Stay diversified
Because you are in a high position or you are earning, large does not automatically guarantee you a stable financial retirement. You have to put in the work and acquire your savings.
A diversified portfolio includes different assets and investments that can help boost your investment process.
A diversified portfolio containing different investments can help you protect and sustain the wealth you have created for yourself. It is an initiative aimed at giving you a soft landing.
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Increase your earnings, work harder
Actively looking for ways to earn more and increasing your salary is the best way to build your wealth over the years. It only gets better from here.
In Nigeria today, there are new ways we young Nigerians can earn money in the name of side hustles. You do not need to be at an on-site job to earn more. The more you earn, the higher the chance of wealth creation if you are disciplined.
If you are comfortable with your base salary and you also receive increases and bonuses, the best way to start is to save them towards your retirement. If you are in debt, this is an avenue to repay your debt.
If you can save at least half of your increase and bonus, you are on the right track to retirement. Also, track your payment roll with your boss; if you believe you are on for a salary increment, do not hesitate to meet the right persons to have that conversation.
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Pay attention to your tax
The government charges quite a lot from tax, and after that has been removed, there may be nothing left from your salary. And saving from taxes is one of the most underrated means of saving.
To reduce tax payable to the government, one can implore tax-advantaged accounts like 401k, which can help you get your direct paycheck before tax is removed. This can be helpful when looking at it long term. Measures like this can help you to keep more to your savings plan.
Read Also: 10 Major Importance of Taxation in Nigerian Businesses
How to Manage Wealth Creation
Creating wealth is one, but wealth management is what can secure the financial bag for you going forward. Let’s look into a few tips to help you keep your financial future in check:
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Pay your bills on time
The moment your payment comes in, pay up your outstanding fees. Leaving our payment hanging by a thread and procrastinating can cause a lot of hassle and result in debt.
Scheduling your payments or setting up an automatic payment plan helps to avoid unnecessary drama and keeps you in check toward your goal.
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Know your wants and needs
Knowing your wants and needs would save you a lot from impulse spending. You would be doing the right thing by actively following your budget and making a difference between your wants and needs.
Check yourself and ask important questions like, “Do I need to eat out five days a week?” “Do I need this sweater now?” “How would buying that wig now benefit me?” Ask yourself similar questions when you are about to make an important purchase.
That way, you can create a difference from your wants and needs.
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Take advantage of fintech companies
There are a lot of financial companies in Nigeria today that can help you build your wealth. These companies are readily available to help you make the right financial decisions and build a beautiful future going forward.
Moreover, if you also decide to invest your money, compounding can take place over the years, and there is more to get after.
Read Also: Top 10 Fintech Companies in Nigeria in 2023
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Make use of bank technology
Word on the street is that the most effective savers are the ones who make a big deal out of their savings. To be able to save effectively, it is better to have a conversation with your banker that you would like to automate your savings.
Or, better still, you can create another savings platform that can help you with your automated savings plan. This way, your financial plans are met, and everyone is happy.
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Invest your money
Deciding to invest your money is a big step that must be taken at some point in your life; so far, you have started saving. Dave Ramsey (a popular financial advisor) once said, “If you will live like no one else now, later you can live and give like no one else.” I couldn’t agree less.
It is completely okay to live below your means for now, and when it is time to get your savings, you will be very glad you did.
Conclusion
Wealth creation is a process that continues. It is not something that a particular amount of money can fix; it is a continuous process.
You can start your wealth creation journey at any age, bearing in mind wealth management tips and how best to go about it. Therefore, plan well and preferably employ the services of a financial counsellor on how to go about it.
Belonging to a community of likeminds, help you to stay committed and make the journey more memorable. Join our Whatsapp community of others who are also on the path of wealth creation.
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