Saving Money Only Will Not Make You Wealthy. You Need To Increase Your Streams Of Income

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If saving is among your financial goals to becoming wealthy, then I am here to burst your bubble. The reality is that financial awareness is never pretty. It will test you. You will realize along the way that there are so many things you got all wrong and that there are so many things you could have done differently. The best thing you can do is to become aware as early as possible.

Here is the harsh reality. You cannot save your way to wealth. The only way to become wealthy is to increase your streams of income. You can save for years and years, and that’s not precisely a bad thing in itself but it cannot make you wealthy. If your aim is to become wealthy, then you need a redirection of strategy.

Why can’t you save your way to wealth? It is simply impractical. Let’s say you just landed an internship after university, and it pays 20,000 monthly. From your calculations, you find that you are able to save 10,000 and spend 10,000 monthly. You work here for a year, and by the end of it, you have saved 120,000 Kenya shillings in your Pursave account. Then, by some miracle, you land a new job that allows you to save 30,000 shillings per month. How many 30,000 shillings’ will you save until you can finally say that you have achieved wealth?

Keeping money in the bank or in any other savings platform cannot accrue enough interest to make you wealthy. Because even if we take an extreme case, making an extra 100,000 shillings interest per year from your SACCO is really not that great. It’s good, but not great. How many years would this take before you actually generate enough wealth?

How do you find other sources of income? Invest, and not just that. Diversify your investments. Don’t hold that money in your bank. It does accrue some little interest but on the grand scale of things that interest is not enough to make you wealthy.

When playing the game Monopoly there is almost always a player who chooses to stay on his money in the beginning. At first, it seems like a nice strategy. Every time when ‘Start’ is passed, this player sees his capital grow. This strategy goes well until others start buying houses and hotels. All of a sudden, rent must be paid everywhere. For the player who stayed on his money, the inevitable bankruptcy does not follow much later. In real life, it is not entirely true that a person ultimately owns everything, and all others do nothing at all. But in real life too it is true that those who invest their money in assets that raise money themselves are ultimately far better off than those who stay on their money and do not invest.

Let’s take another practical example on Medium by Stephen Gardner. A savings account earning 0.5% will take 144 years for you to double your money. Saved money today isn’t growing money. It’s stagnating money. In fact, if your money isn’t keeping up with inflation, it is losing money. The solution to growing your money with the rising cost of living is to invest it.

I’m not saying that you should not save your money. No. Saving is great. But what I’m saying is that you should save your money with the plan to increase your streams of income. You don’t have to wait until you have a million Kenya shillings in your bank. Check out this article on Saving or investing, which way to go?

You may also want to consider saving to start a business that adds your passive income, which is described as money earned from an enterprise that has little or no ongoing effort involved. Take advantage of the digital era where you can do most, if not all of your marketing online. Passive Income: The Lazy Way To Get Wealthy

In summary, here are some ways that you can increase your sources of income. One, increase your personal income. If you have a career, that means an increase in wages and other compensation like bonuses or company stock. If you own a business, it’s an increase in profit. This will require strategy and perhaps increased capital and marketing efforts. You can also choose to do both. Start a business even with a career, or the other way round. You can choose to get into employment to substitute the income you get from the business.

As you crunch those numbers at the start of the month and budget for each and every coin, it is important to know that saving alone cannot make you rich. You can save for other reasons, like purchasing a car or for an emergency fund. That’s great. But if you really want to be wealthy, increase your sources of income. Save to invest, don’t just save blindly hoping to one day wake up a millionaire. You must spend more to earn more. Invest more to earn more.

Check out this article – Want to be wealthy? Investment tips 101

Liked this? You might also find this interesting – When It Comes To Your Money, Don’t Wait For Regulators To Protect You

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I am a passionate 22 year-old writer. I consider myself a young free-spirited soul whose personality is a mixture of introversion and extroversion. I’m a strong believer in the law of attraction. Everything is a reflection.