Let us look at how your earnings should be allocated.
Savings
About 10 percent (or more) of your earnings should be put into savings. I consider this to be one of the most exciting parts of your wealth plan because it can offer you peace of mind by preparing you for the “rainy days” of life. Let me give you the definition of “rich” and “poor”: Poor people spend their money and save what is left. Rich people save their money and spend what is left.
Twenty years ago, two people each earned a N1,000 a month and they each earned the same increases over the years. One had the philosophy of spending money and saving what is left; the other had the philosophy of saving first and spending what is left. Today, if you knew both, you would call one poor and the other wealthy.
Charity
Always give to charity. Charity is the act of giving back to the community and helping those who need assistance. I believe that contributing 5 or 10 percent of your income is a good amount to strive for.
The act of giving should be taught and imbibed early, when the amounts are small. It is pretty easy to take a dime out of a dollar. But it’s considerably harder to give away a N100,000 out of N1 million. You say, “Oh, if I had N1 million, I would have no trouble giving N100,000.” I am not so sure. N100,000 is a lot of money. Start early so you will develop the habit before the big money comes your way.
Capital Investment
With your salaried income, you are going to create wealth. This is the money you will use to buy, fix, manufacture or sell. The key is to engage in commerce, even if only on a part-time basis.
So how do you go about creating wealth? There are lots of ways. Let your imagination roam. Take a close look at those skills you developed at work or through your hobbies; you may be able to convert these into a profitable enterprise.
In addition, you can also learn to buy a product at wholesale and sell it for retail. Or you can purchase a piece of property and improve it. Use this 10 percent to purchase your equipment, products or equity and get started. There is no telling what genius is inside you waiting to be awakened by the spark of opportunity.
So, remember that giving, investing and saving, like any form of discipline, has a subtle effect. At the end of the day, the week, the month, the results are hardly noticeable. But let five years lapse and the differences become pronounced. At the end of 10 years, the differences are dramatic.
And it all starts with the same amount of money...just a different philosophy.
