Wealth Tip: Build wealth by spending less than you earn
Building wealth depends on how much money a person keeps after paying bills rather than just the amount earned. This process is called creating a margin. For example, earning N$15 000 and spending N$12 000 leaves N$3 000. This surplus can be used to invest, pay off expensive debt, or create an emergency fund. Conversely, spending N$17 000 while earning N$15 000 results in a N$2 000 deficit. In such cases, a person might rely on credit cards or borrow money.
Building wealth is not only about how much money you earn. It is also about how much you keep after paying your bills. This is known as creating a margin. For example, if you earn N$15 000 a month and spend N$12 000 on rent, food, transport, debt repayments and other expenses, you have N$3 000 left. That money can be used to build an emergency fund, pay off expensive debt or invest for the future. But if your monthly expenses are N$17 000, you are short by N$2 000. You may have to borrow money, use a credit card