Understanding the concept of wealth
Small things mean a lot. The lack of financial literacy and good grasp of the concept of wealth is a big challenge to your personal financial independence and the economy at large.
Even well educated people seem to lack basic wealth creation strategies. Below are some insights to unlock your wealth creation opportunities.
Do you really understand the concept of wealth?
Majority of people define wealth as owning a good car and a nice house. Wealth is defined in terms of having lots of money in the bank. People with debts are considered very poor. You must consider a cost benefit analysis of each resource you own.
The benefits from using your personal car in terms of convenience and presentation should exceed the costs you incur to use it. Unless you are damn too rich, don’t tie a lot of your money in an owner occupied property.
Do not get too satisfied with too little.
Majority of people consider as having arrived when they attain small achievements like a car or a house. All they start doing is to keep spending and showing off forgetting that they have not yet established sustainable revenue streams of income. The rich person is the one with a lot of discretionary income and earns even while asleep.
If you have to work in order to earn – e.g. people who survive on their talent like musicians, footballers or entrepreneurs who are just starting out, you must be careful. You need to establish businesses from which you can earn even after you retire.
That’s why successful sportsmen in Europe get the services of some of the best investment managers to manage their wealth and businesses so that the player or musician can maintain their life style even after retirement. Are you satisfied with too little?
Above all, don’t punch beyond your weight.
If you are a feature weight, you must box within the same weight and not above it as doing so could be catastrophic. In boxing, if someone weighs higher could easily kill you with a single punch as it carries more weight that you can absorb. Why spend more than you earn? The simple thing to do is to compute your daily earnings and expenditure.
If you are a salaried earner on a monthly basis, divide your salary by 30 days and see how much you earn. Ensure you avoid spending more than that on a daily basis.
Travel a lot. The travel index of local Ugandans is very low. It is estimated that about 70% of the people living in Kampala have never gone beyond 200 kms of their environment. This ratio is worse in other districts. To succeed, you need to be exposed so as to understand what good looks like.
The best education and experience is exposure through travelling and sight seeing. There are so many opportunities around. If you have an understanding of opportunities, you can tap into them. You need to invest some money in your travels so as to meet new people and places. That is critical for your personal enlightenment.
Remember wealth is having a lot of free time for your leisure and doing the things you enjoy most – spending more time with your family and friends. This comes from your ability not to be ‘I can do this myself’ but to create a team of trusted partners to give you a hand when you need to take a rest and vice-versa. If you are still a slave of your business, then you are not rich and have a long way to go.
The article first appeared in SBR April 2013
Mustapha B Mugisa. All rights reserved 2014.