Does increasing your income mean that you are also increasing your wealth? Not Really! The truth is increasing your income is only part of your wealth accumulation process. Why are people earning $3,000 a month broke? In addition, there are those who earn $30,000 a month, but they are still broke.
It is a simple fact that some of them do not manage their money well; their expenses will subconsciously rise above their level of income and wipe out their savings progressively. They know that the attribute of saving money is in all of them, but many a times they are attracted by the things they want to own that will gratify them instantly. By spending on an expensive new car, 42 inches high definition Plasma television set, feature rich portable MP3 and video player, branded watch or designer clothes will surely gratify them. However, the sad truth is their satisfaction will not last for long and will start planning for their next purchase when a new model or design is release. In fact, they are gradually diminishing their wealth instead of accumulating it.
Managing and growing our wealth is such a critical skill and mindset to have that it is often ignore by most people because it is regarded as unexciting and they do not have the patience to see their money multiply every year in a long-term investment.
Let me give you an example. If you are earning $3,000 every month and able to consistently save 10% of that income, which is $300, every month and put it into an investment that will give you an annual interest of 10%, your compounded return in 20 years will be $226,809. That is the power of saving, investing and most importantly building up your wealth. So let us start saving money early, even if it is a small amount, and reduce your expenses now. Given time and patience, you will certainly see the massive wealth benefit along your way.