Wealth Basics — Life Lesson Part 2

If the war and the pandemic have taught us anything, it’s that many things in this world are not certain, and nothing is forever. It has highlighted the things in our lives that are important, the things we have taken for granted, and is testing our resilience, to say the least.

With a worldwide loss of income for many people, I started to reflect on the legendary Maslow’s Hierarchy of Needs. This infamous theory reflects the 5 categories of human needs from the basic needs of survival to the needs that help us thrive. Here they are in order:

1. Physiological needs: such as water, food, rest, shelter
2. Safety: personal security, employment, resources
3. Love/belonging: friendship, family, intimacy
4. Esteem: self-esteem, respect, achievement
5. Self-actualization: fulfilling your potential

Needless to say, the loss of jobs, closing of businesses, and the price increases have proceeded to affect our basic need to survive- to afford food and shelter and resources. Two important points noted here were that: 1. Businesses that provided these basic needs ie. groceries and pharmacies boomed in these times, and 2. Diversification of income is incredibly important.

It is said that the average millionaire has approximately 7 streams of income! What an incredible way to spread your risk and have backup plans should one or two of your business fall flat in the blink of an eye.

I know many people personally that have depleted their savings just trying to keep their heads above water while they were out of work. It reinforced that we cannot afford to neglect our financial planning.

Here are three wealth lessons worthy of noting:

1. Increase income, decrease expenses, or on a more specific note, ensure that your income covers your expenses, including the percentages you need to save for investment, retirement, taking vacations, affording a home, or sending your kids to school.
2. Diversify your income taking into consideration passive income revenue sources.
3. Budget, track your spending, save, invest, plan! This is like a five in one power combo :)

It is never a good time to neglect our financial planning, especially because it directly affects our basic need for survival. You may be surprised at how our small daily actions and contributions can impact our long term overall result.