In a recent address to the nation the prime minister of India had said that money does not grow on trees, when he was talking about the rising fiscal deficit of the nation and the strict measures which were needed to tackle such situation. The reason why I mentioned about it is due to the fact that he was right and money indeed does not grow on trees but there is a process by which you can grow your money, though it is a tough route but if you are resolute enough you can certainly take that route. Let’s look at the complete process by which you will be able to grow you money over the years –
- Start Earning Early – I see many youngsters who are ambitious and want to achieve a predetermined career in their life and when they are not able to achieve it they try again and sometimes they spend 4 to 5 years in vain. In a country like India students preparing for medical entrance examination are the ideal examples of this point, they keep trying year after year to get into good medical college and after wasting 3 to 4 years they end up taking some other career option. I am not saying that preparing for medical examination is a bad idea but when you are not getting success than there is no point in wasting your precious years and better option would be to set aside your ego (which is the main culprit when it comes to entrance exams) take some other career alternative and excel in that field. A person who starts earning at the age of 24 or 25 years would be much likely to become financially independent and secure as compared to the person who starts earning at the age of 32 or 33 years. Hence first and foremost step for growing the money is to start earning it early.
- Invest Throughout Your Life – I know it may sound cliche but if you want to grow money you should start making investment from young age. Investment can be done in many ways like starting systematic investment plan, investing into gold ETF, investment into equity markets, or for that matter making fixed deposit from early age. In the beginning when money goes from your bank account towards these investments you will feel that I am wasting the money but believe me after 10 to 15 years you will realize that it was the best decision of your life as investments tend to give compounded return over the years. The best thing about making investments is that you do not need to have PHD in finance; it is just pure common sense and disciplined approach, but still many people do not adopt this simple strategy rather throughout their life they keep searching for some magic trick with the help of which they will be able to double their money overnight and end up getting duped by scammers and lose their hard earned money. Hence second step for growing money is making investment thought out your life.
- Avoid Debt Trap – Majority of people get bankrupt due to one reason and that is debt. Bankruptcy occurs when individuals do not have sufficient cash flows to repay the regular interest payments and also principal amount at the time of maturity. The next generation of youngsters get lured easily by latest gadgets like mobiles, cars, bikes etc…, and when they start earning money they tend to buy these products on debt thinking that I would be able to repay with my future salary. There is no problem in buying and satisfying you want but problem happens when your wants become unlimited and you start purchasing everything you like and that too on debt. Individuals love the banks and credit institutions because they are ready to give money to them whenever they want to buy something expensive but what they don’t know is that they are getting into the debt trap. A debt trap can easily derail you whole financial plan and stability and god forbids if you lose your job than forget about growing money, your whole life will be in trouble due to your extravagant expenses. In short the third step to grow money is to avoid the debt trap.
- Control Unnecessary Expenses – An unnecessary expense is one which is done by an individual in order to satisfy his or her ego or for show-off. Take an example where your neighbor or your friend has bought some expensive car and by seeing him or her you also think of doing the same because either you are embarrassed or jealous and in that moment you may end making decision which you may not have made. When you are standing in water it is only you who knows that how much is the depth of the water and not the person who is standing on land, the same thing applies to your financial position it is you who is the best judge and not others and therefore do not make the mistake of imitating others when it comes to making expenses. Hence fourth step to grow money is control your unnecessary expenses.
- Proper Financial Planning – Very often you see highly skilled professionals who are genius in their respective fields but when it comes to money they are not that rich which is baffling to many people but the root cause behind such cases is lack of proper financial planning. A person who does not have proper financial plan will never able to grow his or her money and get rich and that is the reason why even if you are not from commerce background you should have some basic knowledge about money and financial products because earning money is not a big deal the big deal is how you retain and grow that money and become rich.
As one can see if a person is wise and disciplined enough to follow above suggestions even money can be grown not on trees rather in your bank account and there is no better feeling in this world (many will disagree on this) than having a fat bank account balance.
[box] In summary one can grow money by following the 5 steps which are as follows:
- Start Earning Early
- Invest Throughout Your Life
- Avoid Debt Trap
- Control Unnecessary Expenses
- Proper Financial Planning [/box]