Making MillionsThe book is a good overview of sound personal financial management. And in this post, I will break down and simplify the content even further to some relevant and straightforward elements on your path to financial independence.
“Poor people spend their money, rich people keep theirs.”Certainly the quote above pretty much sums things up. In other words, according to the book’s authors, “rich people developed the attitude and discipline to pick and choose what they spend money on.” Above all, the book then goes on to challenge you to change your thinking about money:
- Instead of “I want X”, how about “How much is X worth to me?”
- Instead of “Others have more…”, how about “If others did it, so can I…”
- Instead of “I’m dependent on my job…”, how about “How can I rely less on my paycheck?”
Choose Your Path to WealthThe authors discuss and present an overview of several paths to wealth. Depending on your desires, skills, risk tolerance, a person can choose any number of them or just focus on one. I have friends that have very successfully simply focused on one way to build wealth and have continued the focus to this day. Other folks like to branch out into a couple of various paths and activities. There are some key questions that we must ask ourselves when we choose a certain approach. For example, not all approaches are practical or will generate enough profit. I may really enjoy and be skilled at a particular hobby, but can it really become a profitable enterprise in order to build wealth?
- Will it make enough money? It is fine if some things stay hobbies. In fact, sometimes that is even better for your enjoyment and pleasure of something. Perhaps you are great at woodworking, but running a business with this skill may make the practice unpleasant.
- Is it something you enjoy? I do believe we need to enjoy our money making and investing vehicles in some manner. It does not mean that every moment is bliss, but is there some core element of what you do that you enjoy? If I did not enjoy certain aspects of my career, I would certainly make a plan to change!
- Is it something you have a talent for? Like many people, I have fantasized about being a singer. Wouldn’t it be amazing to write powerful lyrics, have an awesome voice, and make millions of people feel alive with music, hell yes! But I do not have a talent for singing, therefore that is not a potential career path for me. But I have other talents and natural acclivities that I have harnessed over the years.
- Is it something you have the skills for? Whatever our chosen path or field, we need to develop skills in that area. Skill building in my view is a never ending process and a great joy of life. Studies have shown that people really enjoy the feeling of mastering things. It is one of the secrets of living a life of True Wealth.
Secrets of the WealthyI love reading and writing about things wealthy people know that many of us have yet to learn. Here are a few gems I pulled from the book:
- Financial security is in your hands. For millions of us I believe this is very true. And it does not mean being a mega millionaire at the age of 35. It means developing and practicing sound financial habits and management that continually build on your success.
- Knowledge is power. Wealthy people tend to continuously seek knowledge. Knowledge and intelligence can be utilized to better navigate our environment and thrive.
- Make money work for you. In the beginning, most of us have to work for money. But what we realize over time, the secret ingredient to building wealth is to make money work for you and your family.
- Being broke can be temporary. We all have to start somewhere. So start today with the little steps to get your finances in order. Focus on one thing at a time if it helps. Choose a credit card to pay off and close, build up that first $1,000 emergency fund, set up an automatic deposit to have $100/month placed in an index fund. This is how wealth is built, one brick at a time.
- Risk is managed. Most things in life have some level of risk. Risk can be managed in life and in investing. For investing, risk is managed by diversification, knowledge about an investment vehicle, and having an emergency fund…
Wealthy people set goals and meet them.What is important to you? We all have to decide on priorities. For some it is family, children, etc. For others, it is travel. For some people they are focused on pursuing their dream job. It is very hard to “have it all” as they say. Or in my opinion it is hard to have it all at the same time. It seems for many of us, we will need to enjoy different things in different seasons of our lives.
STRATEGIES FOR WEALTH BUILDING
1. Live below your incomeIn order to build wealth, you must make something to work with. Most folks spend everything they earn and more. This leaves no room for investments. To build wealth quickly, one must live well below their means. Some FIRE folks challenge themselves to up their savings rates to 25% or 50% or more of their income. That is a very high and hard to achieve savings rate. And, keep in mind any amount of consistent savings and investing is a win and a step in the right direction, even a small percentage or amount. In order to live below our means, we have to analyze our spending habits. We live in a hyper consumer driven society. From the book, “You can’t build wealth until you assess your spending habits and overcome poor ones.”
– Shop secondhand stores
– Look for cheaper entertainment options
– Control housing costs
– Be prepared for child expenses
SEE RELATED: Frugality – 10 Ways