The wealth creation cycle

The wealth creation journey is all about learning, working, earning, saving, investing, and repeating this sequence over a long period of time.

Learn

Acquire the knowledge, skills and behaviours required in the world to generate an income. Knowledge comprises of specialised knowledge and general knowledge. Specialised knowledge is specific to a certain trade, for instance, medicine or carpentry. General knowledge is all about how the world works including learning a language which enables you to practise the specialized trade.

Skills is the practical knowledge acquired to convert knowledge into value. For instance you may know the theory of how medicine works, but you also need the skills to diagnose and treat a sick person.

Behaviour is about your attitude and how you act with others. The right attitude and behaviours enable you to apply your knowledge and skills in a harmonious manner in the work place. It is also essential to be disciplined if you are to consistently acquire and apply knowledge to create value.

We can learn through formal and informal study, by experience, observation and intuition. It doesn’t matter how you acquire knowledge as long as you apply what you know in the real world to create value for someone else.

Work

Work is the means by which we convert knowledge into value. It consists of combining resources to create something useful for other people. It is through work that we solve problems, exploit opportunities, and serve other people. Work is very essential to the journey of wealth creation. Work is spiritual and ordained and without it we can’t really make any progress in life.

Earn

When we work we create value for other people. Earning involves capturing a bit of that value for ourselves. This is typically in the form of wages, profits, dividends, royalties, rents and interest. The kind of work you do will determine how much you earn. If you possess high value skills and work on difficult problems, you will generally be paid highly.

Save

You should not eat all the money you earn. Some of it should be spared to be invested so it can bear more fruit. Without saving a portion of our income we can’t hope to free ourselves from constantly working to make ends meet.

Invest

The savings you accumulate should not be hidden under the bed or buried in the ground. The savings should be invested in profitable ventures. We can buy land and property or shares in a profitable business. We can lend our savings to other people, companies, and the government. We can start or invest in different businesses. Doing this enables us to accumulate wealth over time. Eventually the compounding effect kicks in and our investments can sustain us without too much hustle.

Repeat

This process is never ending and keeps repeating itself. We keep learning and growing, we find more suitable things to work on, we save more, invest more, and repeat the whole thing allover again.