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Showing posts from August, 2011

Essentials of Building Wealth - Post 2

The next phase after you have collected the expenses data is to Analyze it. You need to focus on Two items : Expenses & Savings.The third item is income which we can assume to be fixed. First take a look at your expenses : Expenses follow the 80/20 rule :20% of the items make 80% of the expenses which are driven by lifestyle .Identify 20 % of the high expense items form your expenses. Typically they comprise of payout for Credit cards, Debt Servicing, House Rent, Eating Out & On Vehicle. You need to take some urgent actions which we will discuss in the future posts. Also identify some expense items that are not high on expenditure but which you can certainly live without Secondly Take a look at how much do you invest every month : The rule of thumb is you should put at least 10% of your income into Savings that would potentially grow at an annual rate of 10%. This is easier said than done

Essential Steps of Building Wealth

STEP 1: Buy a Pocket notebook and carry it always with you.....I am sure you are startled by the first step...but read on... STEP 2: Record each and every expense that you are incurring irrespective of the transaction amount in the Pocket Notebook STEP3 :Record the expense & income in an expense tracker spread sheet (Download an expense tracker spreadsheet from Google) STEP 4: Collect the expense & income data for atleast 3 months and then start analyzing it Building Wealth is more about Discipline than Money itself. So Practice the above 4 steps day after day and cultivate the discipline first. We will look at how to analyze the data you had collected in the future posts