What is wealth? You can call it by many other names, such as – "prosperity", "riches", "affluence", "security" and so on. How do you accumulate wealth? Most people would answer, "By maximizing your earning capacity."

However, this is only one part of the story. The whole story involves two parts –
(i) earning and
(ii) retaining what you earn.

Earning Money Is Important

You need to earn in order to live. You need to provide for yourself and your family, and the more you earn the more in-charge or in control of your life you will feel. This is a false feeling of security however, as you are liable to loose the means of your livelihood without warning. This would leave you not only unprotected and vulnerable, but also completely helpless!

Savings on the other hand, provide you with solid ground under your feet. No matter how much you earn – and you will find it easier to save when you spend less and earn more – you need to put something aside for the time when you might have no income to count on. Let's say that such a condition never comes into your life, and you will always have a steady source of income.

How would your savings help you?

Savings Show That You Are Good With Financial Management

In most cases, expenses expand in direct proportion to income. When you apply for a loan or mortgage, the banker will definitely classify you as per your financial capacity. If you were to compare two people who had the same income (high-end) and the same loan request, the one who has the more savings would win.

Why? Because the savings shows that the person is financially disciplined and understands the value of money. A person who spends as much (and in many cases much more) than he or she earns, can become a risk for a bank or financial institution, depending upon market conditions.

Savings Promotes Wealth

A valid argument here is that "You cannot expect pennies to grow into millions of dollars, no matter how "disciplined" you are with your money."

True! But just as any long journey begins with a single step, millions of dollars start with only a few cents. Save for just six month, and you will be able to understand the happiness and security that your savings can bring you. Besides, who said that your savings have to be in pennies and cents?

Invest your savings in safe financial vehicles that will multiply your money over time. Learn about the best methods of investment, or hire the services of a financial consultant for this purpose. It's important that you set aside a certain amount as your savings; you need not just keep it there in the bank. Use this money to build a safety net for yourself and your family so adversity will never bother you.

You will observe that, side by side with the growth of your savings, your feelings of security and safety will also increase. Money is a vital aspect of our lives today; and savings ensures that you never run out of it – no matter what!

Recession is a scary term for most of us, because it conjures up images of financial insecurity and hardship. Only those who have their safety nets in place will not be worried about economic fluctuations such as recession.

How are some people able to stay unaffected while others are completely destroyed by recession? Here are seven steps that can recession-proof your life.

1. Spend less than you earn – do NOT be fooled by the simplicity of this advice! The truth is always simple. Ensure that your spending budget is for no more than 80-90 percent of your income. If you can put aside more, by all means do so; but the minimum you should save is 10 percent of your income.

2. Budget your expenses – learn to live within your means. Budget your income to cover your expenses. Start with the essentials, and then include the pleasurable items only if there is money left for them. Don't worry; there will be times when you can enjoy many things, provided you follow the seven principles of wealth generation.

3. Multiply your money – you have learnt two very critical aspects that lead to wealth generation:

(i) savings and
(ii) budgeting.

The money you are saving should be put aside, but not left idle. Make this money work for you, and generate wealth through wise and carefully chosen investments. In this way, you will have established your first additional stream of income.

4. Protect your money from losses – don't be tempted by high-return promises. Consult financial advisors and consultants before you decide to allot your hard earned money into any investment. In most cases, high returns are associated with high risks. Do not gamble your savings egged on by greed. Temper your actions by consultation with professionals, so your money is be safe.

5. Own your home – there have been many debates on whether it's profitable to own a home or not. The bottom line is this: the money you spend on rent brings you no permanent solution. However, the money you pay against your mortgage will one day make the house you are living in yours! That means you are getting the best value for your money. Besides, real estate is one of the very few investments that grows exponentially over time.

6. Lock in future streams of income – you are not growing any younger. That means that over time, your ability to work will be reduced, but often your expenses will not. You will have a family, with children to put through college and so on, which will require a sustained source of income. A wise person will ensure that there are multiple streams of income, which are independent from one another, so if one fails, the others will hold until things are righted. Use your savings not only for investments to support you in your old age, but also as part of your regular income. A safe old age is worth a few sacrifices in youth.

7. Improve your earning ability – you cannot be successful in any field if you allow yourself to stagnate professionally. That means you need to keep improving your skills. You also need to diversify in your field so you will be able to give more. Specialization, contrary to popular beliefs, does not mean only that you know what you do best, but that you do what you know in the best possible way. This involves constant upgrading and development of your skills and talents.

Apply these principles to your life and no matter what profession you are in, you will never be in want. You will find the secret to recession-proofing your life!

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I will not allow yesterday's success to lull me into today's complacency, for this is the great foundation of failure.

Og Mandino (1923 - 1996)