Every person in the planet wants to live a comfortable life – a decent place you can call your home, provide quality education for your kids, a stable job or business that provides sufficient money, and food on the table. If budget permits, it would be great if you have investments for added cashflow.
Still, all of these will be possible if you start building your wealth as early as now.
Here’s what you can do:
Step 1: Know your financial standing.
This is the first step in building your wealth. Before you think about investment and retirement, you need to know where you are first, at least in terms of financial standing.
How can you do this? List down your assets, investments, and source/s of income. And then, divide them into two columns: passive and active income. Active income is something you are working hard for like your monthly income and side jobs. On the other hand, passive income means you don’t necessarily give your 100 percent attention but it is still income-generating. This includes investments (stocks, mutual fund, etc) or property for rent.
Once you established where you stand in the financial scale, it will be easier for you to identify what areas you need to focus on to build wealth.
Step No. 2: Determine your financial goals.
This is another tricky part. You keep saying that you’ll work hard for your family to buy a house or earn at least a million, but how soon do you plan to achieve it?
To build wealth, it is imperative to determine and define your financial goals and keep it as specific as possible. In line with this, you need to establish how much money you are willing to risk for investment and other methods of income that could help boost your fund. You also need to decide how much percentage of your income are you willing to place in a fund. These tricks will help you determine your financial goals in a quantifiable manner.
Step No. 3: Learn to invest wisely.
Do you really want to grow your money? Apparently, saving is just one of the many things you can do to build your wealth. You also need to consider investing because it helps increase your wealth.
There are many investment options available, so make sure you explore your options. You can also start for as low as P5,000 to P10,000, which is a good amount to experiment on.
Ask if you don’t understand anything since investment can be overwhelming especially for first timers. Avoid borrowing money for the sake of investing since it will take time for you to enjoy your investment and getting buried in debt is the last thing you need. More importantly, diversify. Don’t just limit on one investment option or one stock alone. You’ll never know what could happen, so better be safe and sure.
Step No. 4: Avoid committing financial mistakes.
To be able to build your wealth, you need to avoid these common financial mistakes:
- Living an extravagant lifestyle just because you are earning in dollars.
- Not setting aside a portion of your income for savings or emergency fund.
- Giving in to every demand of your family and relatives.
- Premature acquisition of assets or buying properties without clear and sure payment plan.
- Falling for investment scams.
- Practicing pasikat mentality.
Step No. 5: Be wise when borrowing money.
Loans are not bad. In fact, there are situations where it’s okay to borrow money. It’s how you use the proceeds that puts borrowing in a negative light.
Therefore, be careful in submitting a loan application without thinking twice and evaluating the need for such loan. The purpose must be legitimate such as acquisition of property to be converted into an income-generating asset or to finance a start-up business for additional income. This way, even if you borrowed money, it will be compensated by the income you will earn from the business or property.
Speaking of loan, Balikbayad offers loan facility for OFWs to help you finance your cashflow needs. We understand your situation, which is why we are here to help and make borrowing easier and convenient for you.