By Younas Chaudhary

Believe it or not, I learned invaluable life lessons about conserving and managing money while in grade school in the late 1950s and 1960s, by watching my mother’s consistent, daily ritual in our remote Pakistani village with no electricity. Every day, as the dusk slowly settled in, my mother lit the kerosene lamps in our bedroom, kitchen, and living area. At first, she always made sure to set only a low flame, telling me we did not need brighter light as there was enough light coming in from the outside. Later, as it became darker, she made the flame brighter. And once we fell asleep, she would dim or shut off the lamps for the night.

Through this example, like many others during my younger years, my mother taught me two things: (1) We should not waste what we have, and (2) Our relationship with money is largely behavioral.

Later in my young life, watching my father take his bicycle instead of his motorcycle to make nearby trips, I knew he was making a behavioral adjustment to reduce waste and save money on gas. In later life, my efforts at making money and building wealth came from frugality, common sense, and a deep conviction not to waste any of our God-given resources.

Today, 78% of Americans are living paycheck to paycheck. Why? We are failing as adults.  And as parents, it is especially critical that we set an example for our children by conserving and managing money and saving it for a rainy day. There are an abundance of free resources on financial literacy, but somehow it remains difficult to set an example of sound money management by our own day-to-day routines and actions.

Over the years, I have learned that making wealth is 80% behavioral and 20% theoretical knowledge in financial matters. One needs to invest intelligently in portfolios that yield high returns. If I invest in buying 10 oil wells, I will invest strategically in those that give me a good return on investment (ROI) and thereafter. For example, I have retained a certain oilfield in Oklahoma for over three decades because they have consistently given me good returns, with low operating costs and minimal issues. It is common sense to own and preserve such assets.

In addition, as I made money, I reinvested strategically in different areas that I understood and yielded stable, low risk, high returns. This is not inherently easy; it does require a lot of foresight, consistent daily work, careful cost management, timely maintenance, and ongoing research.

For instance, when oil prices fell to $8 in the mid-1980s, I began diversifying my portfolio by investing in real estate in Canada and the United States. On average, my investments in oil and gas wells were yielding quicker returns. But I knew my investments in real estate in good locations would take more time, but ultimately appreciate nicely in value with the passage of time. I am happy with those investments.

I have often been asked if it is wise to be debt-free. This is a great concept but depends on your investment strategy. Through the years, I have used a diverse portfolio resting in part on bank loans at low interest rates.  The banks trust our business skills, and if you have equity in the investment properties, the banks typically give you higher loans at lower interest rates, which you can use to buy more properties and increase your portfolio’s overall value. It is also good to diversify your existing portfolio if it is not in a good location or is not as profitable, so that you can mitigate risk when needed. I try to diversify my own portfolios by creating a good mix of various assets.

With a  mixed portfolio, you can tolerate risks and increase value.  You can build wealth slowly by pursuing your passion, in your area of greatest interest and expertise. For example, my passion is in the oil and gas and real estate industries, and I prefer to stay in that lane.

Here are a few common sense tips on starting small and building wealth:

1. Be frugal: Always live within your own means. Learn to be contented.

2. Get into the habit of saving, not wasting or overspending. Make sure you save a percentage of your income every month. Use it to invest in something that will yield you safe, high returns.

3. Train children from a very early age by your own actions on saving carefully and managing money.

4. Make money work: Instead of investing money in a bank savings account that yields low interest, find out ways to make your money work better for you.

5. Stay away from impulse buying: We often feel compelled to get the latest new gadget or the fanciest toy because someone else has it. Before you make a major purchase, ask the big question: why?

6. Save on vehicles: Try not to take quick car loans from dealers; instead, shop around with credit union loans. Sometimes those will provide much cheaper rates.

7. Remember that consistent hard work and patience will get you the money and lifestyle you desire.

Here are ways to connect with me

You can read more by purchasing my best-selling memoir “From Dirt Roads to Black Gold.” Note that 100 percent of the proceeds from the sale of this book will help people in need through my foundation, the YBC Foundation.

Disclaimer

The views, thoughts, and opinions expressed in this article are my own and do not represent the opinions of any entity with which I have been, am now, or will be affiliated.  Further, I make no warranty regarding the accuracy or effectiveness of my recommendations, and readers are advised to consult other advisors as well as their own judgments in making business decisions.