“Wealth gives you freedom to make choices” – Oprah Winfrey
Wouldn’t that be great? Having the freedom to choose whatever you want, to spend time with your family and loved ones, to travel to exotic places all over the world, to enjoy the lifestyle of your dreams or to pursue your interests… without worrying about the money or trying to find time off work commitments. Yet to many people, wealth seems elusive and a distant “if only” So what does it take to become wealthy, is it really that unattainable? Actually the keys to wealth creation lies in 4 simple steps. These 4 steps may appear seemingly simple and so commonsensical that you may think “I know this already, what’s the big deal?”. Yet these are the very fundamental steps which are practised by the world’s wealthiest people and advocated in numerous personal finance and wealth management books. So, what are the 4 keys?
1. Earn Money
You must first earn money, in order to have something to start with. There is active income, or earned income, which comes in the form of salary for an employee or income for a self employed or business owner.
Active Income involves exchanging your time for money, for example-putting in 40 or more hours a week at your workplace in exchange for the monthly salary. The return on per unit time spent at work depends on the nature of work, e.g a lawyer would generate a higher return per unit time on his work compared to a secretary. One way to increase active income is of course to try to increase your salary through promotions or looking for better prospects. The unfortunate thing I notice however, is that the higher one climbs in the corporate ladder, the more time spent at work, and the less time for leisure. So the nett return on per unit time may not actually be higher ultimately.
There is another type of income known as Passive Income, which means your money is working for you, instead of you working for money. 
Passive income can be generated outside of your waking hours and not be limited to the 24 hrs/day. Examples of passive income could be investments e.g stocks or property that generate returns/rental, businesses that you own but do not have to run personally e.g franchise, automated machines such as online businesses or affiliate marketing websites that generate money for you while you sleep. One of the most efficient ways to increase your income is to start building multiple streams of passive income. The harder your money works for you, the lesser you have to work!
2. Spend Less Than You Earn a.k.a Save
Which do you do first? Save before you spend or Spend before you save? If you usually spend whatever you need and try to save what’s left, chances are there wouldn’t be much of it left at the end. Have you noticed how some expenses somehow just arises to use up the balance funds, like a irresitable sale, stuff to get or just some emergency? So what can you do to counter this effect?
The trick is to set aside a fixed amount of saving each month to pay yourself first before you spend the rest. This can be easily automated through a regular savings arrangement with the banks or other financial institution. 
How much of your income should you save? Generally financial experts recommend setting aside 10% to 20% of your monthly income as savings. This percentage can be adjusted according to individual’s financial status, the key is starting the habit of paying yourself first, because that’s the fundamental step for achieving wealth. Once you have developed a consistent habit of saving, the next important key is to
3. Invest The Money You Save
Why invest? Think about it, if you are saving hard and setting aside $500 a month in the bank, earning an interest of 0.2%p.a, while inflation kicks in at 2%-3%, the nett effect is that your money is evaporating with time, even if you didn’t spend a cent. Do you know your $10,000 will be worth only $5,438 in 20 yrs time at an inflation rate of 3%? I too feel the effects of inflation on my money’s purchasing power. 10 yrs back, a movie ticket costs me only $5-6, but now a ticket can easily cost $8-9, back then I can have a proper meal at the food centre for $2-3, now it can easily come up to $5-6 in the food court. 
Many Singaporean women have a good savings habit, but saving alone will not be enough for our retirement, let alone building wealth successfully. Before we can talk about wealth accumulation, we have to make sure our money is at least matching up to inflation. The question then is – How do you get started with investing? Investing in itself is a extensive and interesting topic which I will share more of in subsequent posts.
Stay tuned for the keys to successful investing and tips to getting started.
4. Protect Your Money
Many people overlook the importance of protecting their hard earned money and the financial world they have created for their family. In Singapore, most people have some form of insurance, yet studies have shown that Singaporeans are grossly under-insured, with an average Singaporean requires life insurance protection of $494,851, but only insured for an average life cover of $165,628. Imagine working so hard to earn money, saving and investing for a
brighter future, only to have a disaster e.g illness or disability take it all away from you.
Protect yourself and the financial world you’ve built so that a disaster – big or small doesn’t take it all away from you. Ensure that you have the necessary insurance such that you and your family will be well taken care of.
There are only 4 essential types of insurance you need
1) Hospitalisation Cost coverage – to pay for your medical bills for hospitalisation
2) Critical Illness protection – to pay for your treatment and income replacement during illness
3) Family Income protection – to take care of your dependents
4) Disability Income protection – to replace your future income in the event of disability Review your insurance coverage periodically and especially when there is a major life stage change e.g getting married, starting a family or job changes to ensure that your coverage is up to date and meets your needs.
By protecting your money, you can get wealthy and stay wealthy!
In summary, the four keys to wealth is simply
Earn + Save + Invest + Protect Money
Wealth creation is simple. Many people are constantly searching for the next Big thing or Secret formula to success, when in fact the solution is already right before our eyes and all you need to do is to apply them and take action consistently! “
The journey of a thousand miles begins with the first step” ~ Confucious
Wealth happens one step at a time, take the first step today and start creating the wealth and freedom you deserve!
To your Success and Happiness, Yong Hui
