Formerly from the UK, I grew up in mediocre town, went to mediocre school and I followed in the footsteps of my parents. I went to school to get a great education hoping that one day I’ll be able to afford anything I wanted. Soon it was time to leave studies and focus on my “career”. I got a job, I earned, I paid my bills and got a car to match my job. Without realising at the time, that was the biggest mistake of my life. Obtaining the car through finance and having that liability to pay every single month. This is the first signs to becoming financially unstable and ultimately forming part of the daily rat race that will see me trapped forever.

To make your money work for you, there is one simple rule and I only learnt this much later in life. Focus on assets as opposed to liabilities. It’s that simple. Liabilities being everything that takes money away from you, finance, mortgage, credit cards, personal loans, those are the things that will ultimately make you poor. Think about it, you go to work to get paid, you pay off your mortgage debts, car loans and the circle begins again.

However the assets – this is something that puts money in to your pocket. If you want to be rich, spend your life buying assets and I have chosen to work within tangible assets, something you can see, feel, stay in and sell on. I work with tangible assets within emerging and distressed markets that not only appreciate, but you earn from rental income, rental income that puts money in to your pocket every single month to supplement your income from your daily job.

Making your money work for you is easier than you actually think. For example, If you want a nice new car, instead of thinking, I can’t afford the car – why not think, HOW can I afford the car. Personally I would look for money making assets; my chosen example would be real estate. I carefully invest in to an emerging market or a distressed market that will generate me income, with that income I’ve generated from my money making asset; I can afford to pay for the car loan without losing any liquid cash. Once the car is paid for, I now have an income generating assets that has appreciated in value, plus a nice new car that is mine to own 100%.

Depending on how much money you have to start with, you could use the example above to generate you future financial success to overcome mortgage repayments, car loans, credit card bills and to secure that all important financially free future. Once you have obtained the asset, it will usually look after itself without any support from you whatsoever.

So as my first post and if you’re reading this, take a look at what you can cancel out in your life to free up more cash to focus on building that asset column of your own. Take a look at your cash flow, where you get your cash and where it goes because that will tell you a story of how you handle your money.

Remember, it’s the Assets vs. The Liabilities and now is the time to learn the difference between the two.

I run a small investment consultancy and I’m always seeking ways to further my wealth creation through real estate, feel free to send me an email and follow us on twitter and Facebook.

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Following are 10 tips which consistently increase our wealth creation.

Tip 1 – If you are in a low income bracket, investing $1,000 in your superannuation fund each year can net you a whopping 150% return from the Government’s Co-contribution scheme and in fact last year gave up to a 300% return.

Tip 2 – The best home renovation is to upgrade an old bathroom. With an estimated 102% return. Kitchens and windows come in second adding about 90%. But of course windows have the extra benefit of saving on your energy bills each year. In upgrading your property you also have the benefit of making it more saleable – an important consideration. As a rule, upmarket improvements pay off at lower rates than mid-range or inexpensive ones. And making a house bigger and more luxurious that those of your neighbours will also cost a lot more than it will return when the house is sold.

Tip 3 – It’s worth refinancing your mortgage when you can cut your interest rate by at least 1% and you expect to be staying in your house for a while. Otherwise the benefits of a lower monthly bill many not be worth the additional expenses of transaction costs and fees involved in any refinancing.

Tip 4 – For a home deposit, it’s best to come up with at least 20%.

Tip 5 – Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%. These guidelines include payment on all loans, such as a car loan and credit card debt as well as any major payments, such as school fees.

Tip 6 – If it sounds too good to be true or you don’t understand how an investment works, don’t buy it.

Tip 7 – A lot of people who have large investment portfolios today, started out small. So aim to save at least 10% of your earnings for investment.

Tip 8 – Expect the unexpected and have an emergency account. Keep three months’ worth of living expenses in a high-yield savings account. If you have children you may need six months’.

Tip 9 – The earlier you start saving, the less you’ll need to set aside every year to meet your goals. That’s because you allow your money more time to grow – the gains on your invested savings will build on the prior year’s gains.

Tip 10 – Diversify your investments and then diversify within the areas. For instance, in property have residential and include commercial or if you only want residential, include a mix of homes and strata properties. This gives you the advantage of limiting your overall risks while giving you the best opportunity to capitalise.

Try to estimate future maintenance costs and work them into your budget. Some homes, especially older ones, may require more regular upkeep than homes built with more modern materials. Nothing outrageous. Just plain sensible suggestions.

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