Most people have a desire to create wealth for their future generation, but they rarely fulfil it. When they are older, they bemoan the opportunities they missed. However, as a financially aware citizen, you do not want to miss the opportunity to stay economically independent when you do not want to work.
Let's understand the starting point from where you can begin to create wealth
Financial stability
Establishing financial stability before even starting an investing journey is necessary to keep you and your family safe. Life is uncertain, but you can make your finances certain enough to use during uncertain times.
Creating an emergency fund equals at least 6 months of your expenses and is necessary to cope with unpreceded scenarios in your life, like job loss, sudden disability to work due to illness or other reasons, etc.
10% of your income must be invested
In order to gain healthy returns in the long term, you must invest 10% of your income in financial instruments. Always have a financial objective while making an investment.
A well-diversified portfolio would help you in generating passive income that gives you financial freedom in the future.
Settle down your inefficient and expensive debts first
If you are looking forward to a financially stable life, you must stop increasing unproductive debts. Debts that are helping you generate income or giving you some sort of value are productive debts.
Your debt payment priority should be to pay off inefficient debts first and then expensive but productive.
Health is wealth
"My worst investment has been my health. I would encourage everybody to invest the most in that," Jhunjhunwala had said in one of his 2018 interviews.
Why don't we apply his saying early in our lives? As healthcare expenses skyrocket after the Covid-19 situation, we must all be prepared for the diseases and expenditures we might face.
Buying a health insurance policy for every family member could be an essential step to moving forward.
Life insurance
Even in your absence, your family will always rely on you, so you don't want to disappoint them. Life insurance could rescue your dependents, whether it's to replace lost income, pay for your child's education, or ensure that your spouse receives the much-needed financial security.
There are plenty of tips and tricks prevailing in the market to get quick-rich. Instead of wasting time on learning irrelevant tips, follow these slow steps to create your wealth. The process of first protecting yourselves and then focusing on creating wealth & legacy would work a lot more than quick tips.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com
