For those of us who like to read (and write) information on personal finance subjects, we spend energy on a wide range of wealth building strategies. Too often we ignore the concept of making money because we feel it’s something outside our control. After all, our employer pays us, we don’t pay ourselves, right? The reality is that your income is your greatest wealth building asset (at least until you get everything else going).
The first thing to focus on is keeping and growing your income. Obviously, this is a concern for many people today considering the high unemployment in America. If you’re wanting to improve your financial situation, you must re-establish your income even if it means taking a less-than-ideal job. If you have a job still, do what you can to keep it — and if you’re in the minority with an opportunity for a raise or other opportunities, take advantage them!
Next, I believe it’s worthwhile to pursue additional income opportunities to create income outside your “main job.” This has been a main focus of my blogging for a couple years now — finding ways to make extra money to improve one’s financial situation. So, do put in the time and effot to build extra income opportunities for yourself.
Now, letting your income work for you is what almost all Americans struggle to do. What do I mean by this? I mean letting your income actually building your wealth. Instead, most Americans inhibit their income and put obstacles in front of it and prevent it from building wealth.
For example, the biggest obstacle is debt. By tacking on insane levels of debt, we fail to let our income build wealth. How? Well, big chunks of our income immediately go towards paying interest on our debt rather than building wealth via savings and investments. Basically, we latch on to ourselves burdens that force larger and larger portions of our income to be diverted to others instead to ourselves.
Even for those of us without debt, we still put things in the way of our incomes such as lifestyle and consumer spending. Even if we’re paying cash for our lifestyle, we’re still preventing our income from building wealth. Let me give you a real example — how about what we spend on food, specifically, eating out? By having the habit of eating out frequently, we automatically funnel a portion of our income into restaurants all in the name of a short term craving. While eating out is great, keeping the frequency to a reasonable level is a smart way to allow your income to work for you more and more.
Learning to invest and learning about credit and so forth is great stuff to learn, but don’t lose sight of the fact that your income is your greatest asset. Maintain it, maximize it, and let it work for you. Divert as much of your income as possible into assets and wealth building instruments — namely, investments and savings. Make incremental improvements in this area and you’ll see your financial situation improve drastically.
Photo from Wikimedia Commons.
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