Earning big bucks won’t make you wealthy. Know why

You are reading this because you want to be wealthy. How does one become wealthy? By earning/making lots of money, right? WRONG. Famous Australian financial advisor Noel Whittaker said, “Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do.... it is a matter of managing your money properly.”

There is dramatic difference between making lots of money and managing (keeping) lots of money. Making money and managing money requires completely separate set of skills. For making money we need knowledge and expertise in our area of occupation. A good CEO is one who is well qualified and experienced in his job. A good singer has trained his/her voice and also performed several times. A successful businessman understands his trade well.

Nowhere in above examples will we find that to perform well in one’s occupation money managing skills are required. There are completely separate sets of skills required for managing money. Unfortunately there is no correlation between skills required for making money and skills required for managing money. If there was co-relation between two skills then we would have never had instances of businessman who have ‘made’ lots of money going bankrupt. Bankruptcy is cause of poor money management. Similarly, we know of several instances where actors/sportsman of yesteryears who earned lots of wealth in their hay days but struggled in their later years of life.

First thing you ought to know to become wealthy is the knowledge of amount of money you have. Do you know your exact bank balance? How do you keep track of your bank balance? Do you use net banking, ATM center, tele-banking, do you refer to bank passbook/statement or do you, on your own know how much money you have in account. If you are dependent on any of the bank’s channels like net banking, ATM, tele-banking or their statements for knowing your balance then it means that your bank is telling you how much money you have in them. Ideally shouldn’t it be you who should be telling bank how much money you have with them? In case you are finding it difficult to remember bank balance start maintaining parallel bank passbook but always ensure that it should be you who should be telling bank how much money you have with them and not vice versa.

Exactly same principal applies to your spending and more so in case of credit cards. If you are depending on your credit card statements to find out your spending, someday or the other you will face problems. Always save your charge slips. Better still if you can maintain a register to track your spending.

Over a period of time develop habit of maintaining all your records. File your investment statements, income-tax papers, insurance and pension policies, property documents, WIIL etc.

Lastly keep reviewing. Wealth management is not one off exercise. Many a times individuals feel money management exercise is difficult and cumbersome, but then who said that money management is easy.