The road to wealth is not determined by how much you earn, but by how you utilise income you have and how much you save and invest.

You need to take control of your finances. One of best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within 20/80 plan.

If you write down a list of your monthly net income, then in another column write down a list of essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct second column from first - and this will give you maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.

To find money to invest for your future, you need to make sure that your outgoing expenses are less than income that you are receiving. You need to develop an excess that you can have free to invest.

Now before you start to think...."well I don't have any excess left...if I was earning more money....then I would have some free". Let me dispel this myth...and tell you that it is a known and excepted fact that amount of money that people earn has little if any bearing on whether or not they have an excess left to invest. The only way to create an excess it to spend less than you earn, instead of spending all that you earn.

Even doctors and lawyers, who earn well over $100,000.00 per year, often end up at retirement with little more Net Worth than factory or office workers.

Net Worth is calculated by deducting value of all liabilities or loans you have from income-producing assets owned to give you net value of your income-producing assets.

Why aren't high-income earners retiring wealthy? Why don't they end up with a greater Net Worth than someone on a low income? It is quite simple. Human nature seems to dictate that whatever anyone earns....they spend....some even spend more than they earn and charge it on their credit card.

The higher your income grows...the more you spend and only way to get out of this cycle is to realise that it is happening, and make a concerted effort to reverse this habit....and to begin reducing your expenditures so that you can free up money to invest.

The best way to do this, is to try 20/80 plan. This plan simply means that as soon as you receive your pay....you put aside 10% for God, 10% of it for investment....and then use other 80% to live off of. Put aside 20%, and then pay all bills and do grocery shopping....and then after that whatever is left over you can spend.

Most people do it wrong way around...they pay bills, do shopping and spend what is left over, never leaving any left to save or invest. By taking investment money out first you will alleviate temptation to spend it.

The road to wealth is not determined by how much you earn, but by how you utilise income you have and how much you save and invest.

You need to take control of your finances. One of best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within 20/80 plan.

If you write down a list of your monthly net income, then in another column write down a list of essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct second column from first - and this will give you maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.

Visit authors web site at http://members.optushome.com.au/dlohrere/

This example of course has not taken into account initial purchasing costs involved to secure investment property, nor has it taken into account rental income that you would also be receiving....I have simply used it to demonstrate that more assets that you can get working for you, better off you will be.

Furthermore, if you already have equity built up in your own home, it is possible to purchase an income producing property, without even having to outlay any cash whatsoever.

I will discuss this in further detail shortly, but first I would like to explain to you miracle of compounding interest - because this is major factor that allows an average person to create a source of immense wealth. It is a little understood concept that can have a huge bearing on your future, once you understand how it can best be utilised.

Compounding is effect of letting something grow, and then rather than taking away newly created amount, you leave whole thing in tact, and allow further growth to take place on entire amount, and so on. Effectively making it grow exponentially.

For example. If you have $1,000.00 that is growing by 10% per year due to interest received. Then you have two options, you can withdraw income of $100.00 that has been generated, or you can leave it where it is, and allow it to compound (earn interest on interest),

If you allow it to compound, then in second year you will get an income of 10% of $1100.00, which is $110.00, instead of $100.00. This may not sound like much, but longer you leave money to compound, larger it will grow. As each year passes it will grow by a larger amount, in fact after 10 years it will be worth $2,593.75 and after 40 years it would be worth a massive $45,259.42. Remember that if you had withdrawn $100.00 interest each year for same period 40 years - then you would have received only $4,000.00 and would still have original $1000.00, being a total of only $5,000.00. This means that by letting it compound you would have earned more than an additional $40,000.00.

One of easiest ways to calculate how compounding interest works with different rates of return is to become familiar with Rule of 72.

This rule states that "The number of years that it will take for your money to double is 72 divided by interest (growth) rate".

Therefore if you have $1,000.00 invested at 10% interest, then number of years that it will take for your money to double to $2,000.00 is 7.2.

72 divided by 10 = 7.2

If your money is invested at 7% interest, then it will take approximately ten years to double in value. If it is invested at 5% it will double in just over fourteen years.

The two most important aspects of compounding are one: rate and two: time.

The higher rate and longer time something is left to compound, greater final result will be.

This is why sooner we start investing, better.

Visit authors website at http://members.optushome.com.au/dlohrere/