Saturday, 16 Oct 2021

The Psychology of Wealth and Its Effects on Society

The word “wealth” itself is extremely relative and broad in definition. DefinitionWealth simply is the accumulation of wealth, specifically financial wealth, with no effort towards enhancing social value. In its most basic form, this means to have possessions and resources that are both useful and have a market price. This also includes the root meaning found in the original Indo-European word weal, which was from an Indo-Saxon root weald.

However, wealth can also mean having a comfortable lifestyle, having enough money to enjoy life, spending money on material items that are needed and desired, making a profit, having material possessions like art, luxury goods, clothing, furniture etc. It also can mean being wealthy through inheritance, land or other tangible assets. The next level up is “rich,” which means one becomes wealthy through hard work, gambling, inheritances or through smart investing. In the current definition of the term “wealth” the latter level is very close to the original meaning.

A financial plan is the first and foremost step towards building wealth. A well-constructed financial plan ensures that your assets, including equities in your business, are properly financed at the right time. A good financial plan allows you to access cash during emergency situations without unnecessarily incurring debts. It is also a preventive mechanism, allowing you to avoid over-reliance on credit cards and other forms of external financing.

Another important aspect of wealth creation is creating a sufficient reserve fund. This reserve fund should be managed prudently and should meet day to day expenses and obligations. This is crucial especially during times of economic downturn. During World War II, US president Roosevelt created the Federal Reserve, which is an institution designed to keep the national monetary system functioning smoothly. Through this process of creating a rainy day funds, the government was able to avert a great depression.

This is just one of the examples of how the accumulation of assets contributes to overall prosperity. The accumulation of assets is not limited to the uppermost echelons of society. Anyone can create wealth, provided he or she has a sound mind-set and employs sound fiscal policies. The accumulation of wealth for the global community is a crucial process that must be handled very sensibly. This is one of the reasons why there are certain precautionary measures being implemented in order to ensure the preservation of the values for the lower classes of society.

In this modern age of globalization, it is important for everyone to come up with his or her own personal wealth management strategies. A sound fiscal policy may be the key to a successful wealth building venture. A better understanding of the value of real estate assets and the associated risk factors is another critical aspect. All these aspects will play a significant role in ensuring the long-term sustainability of wealth creation and hence its worth.

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