Tiny Droplets of Wealth Accumulation

wealth

Wealth accumulation is a gradual process that is similar to growing a garden through drip irrigation. You will never feel the pain of saving or eliminating unnecessary expenses. You will be comfortable, confident, and luxurious while the droplets accumulate silently in the backdrop. One fine day, your bank balance will make you satisfied by the wealth you have accumulated.

Myths of Making Wealth

Rags-to-Riches: It is time to stop such insane ideas from dominating your mind. Wealth doesn’t flow through casinos, horse racing, and online betting games. They only drain your savings and drive you more insane every Dayanidhi.

Risky-Investments:  Risky investments in unknown and insecure trading can run your financial base and drive you to bankruptcy within a short time. You may never be able to recover from such conditions.

Truths of Making Wealth

Savings from your earnings could contribute to wealth accumulation considerably though not significantly. Reducing everyday non-essential expenses can also be helpful in saving. But the truth is you have to increase your sources of income intelligently.

Creative Works: How creative is your mind today? Can you paint, sing, write, play an instrument, compose a lyric, or teach a foreign language? You may have other talents that are untapped. You can utilize such talents for wealth accumulation.

Take some time off every day from your work and devote for talent training. Within the next few weeks, you will be ready to earn. Find the right promoter /consultant in your city or online. You may go solo or build a team. Start performing and start earning. It could become one of the most significant sources of wealth accumulation.

Job Change: Experience and specialization on your professional domain can help you to earn higher than your present income. Find a high paying employer and change your job within the next few weeks. You should also evaluate the risks and calculate the benefits before making a decision.

Extra Job: Taking a part-time job is yet another source of accumulating wealth. You may have to spend more time at the desk or on the field during weekdays. It may also mean sacrificing the weekend and giving up many hobbies and habits. You can accumulate wealth consistently by being persistent. 

Small Business:  You can start a small business and become an entrepreneur. Contact your bank and enquire for the business loan. Invest in a business in which you are proficient. Or you can get trained in a business that is potential revenue earner. It is a good practice to make your spouse as the partner if you are married. S/he can manage your business when you are busy in your work.

How About Stocks

Stocks and bonds can be rewarding if you invest in the right industry that will continue to grow in spite of market risks. Treasury bond, logistics stocks, and savings certificates are some of the recommended investments. You may consult your stockbroker and assess the other possibilities that are safe and rewarding for long-term investments.

Try any of these methods for two or three months. You have to save all the earnings from such sources without spending. Then you can know how much wealth you can accumulate in the future based on what you have done.

How can Renting or Buying an Office Space Affect your Balance Sheet?

Key

Before we start discussing about the effects that purchasing an office space has on the balance sheet, it is important to understand what the balance sheet and the accounting equation is and its importance for a business.

The accounting equation, which is the most significant equation in the universe of accounting, is quite simple:

Assets – Liabilities + Shareholder’s Equity

Assets are the things or objects that a company owns which have an economic value. These are generally things which the company can use to gain money. Assets are considered a resource for the business.

Liabilities are claims on the assets that are given upon by people other than the owner of the business. These are the debts that the owner owes to his suppliers from whom he has taken the assets. These suppliers have a claim on their cash.

Renting or buying space office space

When the liabilities have been paid, the thing that is left by is the shareholders’ equity. This is what the owner can call his own or claim to in his business. If the business if solely made by one person, then the equity goes to the owner. If the business is incorporated, then it goes to the shareholders in terms of shares.

The assets are what the company can use which include things like cash, inventory, relievable accounts, etc.

All of the three elements ultimately go on to the balance sheet made by the company. This shows the financial position in terms of business.

The liabilities are taxes and such things. The shareholder’s equity is both the money that the owners put in the business in the start and any gains or losses that have happened in the business since.

How is office space accounted for? Do you consider it as expenses or assets? If you happen to buy an office area, then it can be used for a long period of time, hence when it exceeds its accounting period, it can be counted as an asset.

On the other hand, if you rent an office area, you are likely to keep paying for it for a long time till it expires its expiry date. It involves a risk of liability from the suppliers if you aren’t able to pay off the debt.

There is a matter of how you use the office area that you have purchased. If you paid the money on cash, it is likely that it will be used for more than the accounting period. This reduces your cash asset and the office purchase account increases in the current assets. There is a balance in the accounting sheet and the purchase is recorded in the cash accounts.

On the other hand, if you buy the office with credit, and if it is a large amount, which an office space generally is, and you are likely to use it for more than one accounting period, then your liabilities increase as well as your current assets. As a result, there is a balance in your accounting equation. A purchase of supplies on the account is recorded in the liabilities and supplies accounts. In both the ways the assets will stay the same because the decrease in one asset matches with the increase of another.