What is financial literacy? The best way to create wealth starting from zero

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What is financial literacy?

Financial literacy is the possession of skills and knowledge that allows an individual to make informed and effective decisions using their available resources

How do you become financially literate?

Financial literacy is not taught in school, this is why many educated people are poor because they live paycheck to paycheck

So you will become financially literate by reading personal finance books, articles online, attending seminars, conferences and courses

How to create wealth if you’re starting from zero?

Becoming wealthy is the dream of every individual on the planet when you’re still young but the dream goes on fading as someone starts to grow

So how do you define being wealthy?

Being wealthy is all about having the ability to afford whatever you want in life using your available resources

It is all about having valuable assets, resources and material possession, it is the ability to take every decision you want in life without limitation

With wealth and riches, you have the power to influence the world in any way you want it to be and afford to live anywhere you want

Now what is the probability of you accumulating wealth? How do you create wealth? Do you believe that you will become wealth or you have given up?

The truth is that becoming rich and wealth is possible if you’re determined and willing to put in the work

Stop working for a living and start building wealth, you can afford anything you want in life if you tune your mind towards building wealth

So what steps can you take to create wealth?

This is the purpose of this article,

Becoming wealth is not what something you think of today and you become tomorrow, you need to put in the work

You need to take action and make a decision to commit yourself towards becoming wealthy

So you need to start put in the work and commit yourself towards building wealth that will stand for generations to generations

You can achieve whatever you want in life if you’re determined to put in the work

So what are the steps you need to take in order to create wealth?

  1. Get a job

To become wealth, you need to have a regular income that is coming into your bank account, getting a job is the foundation to creating wealth,

But you should not be on the job for a long time; a job is just there to give you a living and experience

Once you have income coming in on a regular basis, you need to first

Step II: Start saving

Once you have a steady income flow, you need to start saving from day one, saving is the back born of building wealth, you need to start saving money from day one

Without saving money, your spending all the money your earning, so if your income is greater than your expenses, your saving money but if your expenses are greater than your income your borrowing money

If your income is equal to your expenses, you’re spending all the money you earn

Saving will open more opportunities for you, so if you’re interested in building wealth, you need to become a saver.

Once you have saved money, you need to put that money into something that will generate positive returns in the future

You don’t need huge sums of money to start investing, you can get started online for as low as $1but the more money you invest, the greater the returns you will get in the future

Investing will offer you the opportunity to earn passive income while you’re sleeping

It will offer you the opportunity for your money to start producing more money in the future

So what are the best investments to make?

You need to invest in assets that have the potential to generate returns in the future; these investments include stocks, real estate, stocks, bonds, index funds and rental property

You should invest in assets that will guarantee you a steady cash flow in the future

Examples of real estate include single family homes, theatres, hotels, bars, lodges, duplex, rental offices and apartments

You should also invest in yourself in terms of improving your skills, health since these will help you make more money in the future

Step IV: Make proper use of your time

How much is your time worth? What is your hourly rate?

Creating wealth from nothing is all about managing your time,  we all have 24 hours in a day but why is it that some people earn more than we do?

This comes to knowing what your magic hourly rate is, if something is not worth your time, you need to delegate it to someone else

You need to learn to learn how to manage other people’s time to your advantage

Step IV: Learn to use leverage

Leverage plays a significant role in wealth creation; you need to learn to use other people’s money to your advantage,

People and banks have the money you need, all you need to know is the difference between assets and liabilities

You need to use other people’s money to invest in assets that will generate more returns greater than the interest you will pay back on the debt

The OPM strategy emphases that you use other people’s money to invest into assets that have the potential of bringing cash flow which you will use to pay back the loan.

You need to make use of these financial resources that are available to you

So you need to know the difference between assets and liabilities

Assets are those things where you put your money in expecting to get more money in the future while liabilities just take away money from you.

Examples of assets include real estate, stocks, rental houses, business and yourself

Liabilities include your car, residential home, etc

So once you have borrowed money, you need to put it into assets that will bring more money in the future that you will use to pay off the debt

If the interest rate on the debt is greater than the return on investment that is a bad debt

It will be a good debt if the return you get from the assets you have invested in is greater than the interest you will pay on the loan

So what is the difference between good debt and bad debt?

Good debt is the money you borrow to buy assets that will bring cash flow which you will use to pay off your debt

While bad debt is the money you borrow to cover your needs, wants or expenses

Examples of bad debt include student loan debt, home mortgage debt, etc

Leverage will help you grow wealth from nothing

Leverage include using other people’s money, skills, talent, time and automating some tasks that can waste most of your time

Step V: Make a financial plan

A financial plan involves you putting in place strategies that will enable you create wealth in the most affordable way

It involves setting goals of where you want to be in future, setting targets that are to be achieved over time, setting deadlines etc

It includes knowing the amount of money you need in order for you to create wealth

You should set financial goals that are SMART meaning Specific, Measurable, Achievable, Realistic and time bound

Step VI: create multiple income streams

To build wealth you need to have several streams of income, you need to have income coming from different sources

It difficult to make money but more difficult to keep it so once you start receiving money to your bank account you need to create other income sources

Use the income you’re earning to create passive income streams

These income streams will include earned income, capital gain income, passive income, interest rate and portfolio income