Building a strong financial position may seem simple from the outside, however, it takes skill, patience and solid information to get there. Below are 5 key things to consider when building your wealth foundations. Handle your money correctly and you are well on your way to financial success and freedom. From commitment to the correct way to save your money, you need to know the exact steps it takes to build wealth like a pro. It doesnt need to be complicated. In fact, the simpler the better. Take the following steps on board and youll find your path to success will be smoother.
When we talk about wealth building, what are we talking about? It’s not about simply saving our pennies and hoping for the best. Wealth is about success in all areas of your life. Right now we are just focusing on the financial side. The financial side is an absolutely critical part of the whole equation. So what are the financial goals? Well that is up to you. A good rule of thumb is to know that it will take a lot more of anything (including money) than you anticipate. Have a good long think about what financial wealth is to you. You might find that it all comes down to freedom. The ability to choose what you want to do and when. Where you want to travel, etc.
So now you have a goal. Commit. It sounds simple. It’s more difficult than you think. Commitment means doing everything you can possibly do to ensure you reach your goal. Make your family, friends and co-workers aware that you are committed to you and your family’s financial success. This ties into the next point, being obsessed.
If you have not read ‘Be Obsessed or Be Average’ by Grant Cardone yet, pick up a copy as soon as you can. It gives you permission to become obsessed with success. As the name suggests, being obsessed is vital. So what does being obsessed mean? It means going all in. Commit, then go all in.
Before you make any financial decisions, ask yourself: “Is it in my interest?”. This essentially means you are not making decisions that will be detrimental to you and your financial goals. You might be thinking that sounds selfish. Not taking care of your family is selfish. Make decisions that will benefit your position.
Now let’s get onto some more technical ideas on handling your money.
Focus on income
That $3 latte isn’t your problem. You simply aren’t making enough money. Focus on income 95% of your time, and expenses for 5%. You find you’ll start making more money instead of worrying about pennies. Both business and people don’t get rich simply from saving. If there is not enough income coming in, no amount of saving will make you wealthy. Saving on $3 coffees is a good idea to have a bit of spare change but think about it this way. Does that coffee make you more productive? Could you make a few extra calls that day? If yes, then that $3 is an investment in yourself.
That being said, needless spending needs to be curtailed. That’s important too. We’ll mention saving later on. The main thing you need to get out of this is that spending isn’t your problem. Ever. You simply aren’t making enough money. Make income your priority, and everything else starts falling into place.
How to save properly
Saving is simple. You put money away to have at a later date. Start up a savings account if you don’t already have one. It is easy to find one without fees. Ideally, do not attach a debit card to it and set a rule that you NEVER touch that money.
Now start small. Consistently save bits of money that you have lying around. This will get you into a habit and the routine of saving. Did you get a bigger pay check or did your commission go up this month? Save it! Don’t blow it. You lived without the wind-fall beforehand, you can afford to save it.
A great tip for saving is to automate it. Allocate a certain percentage of your earnings to go to savings. The more the better. Studies show that the financially wealthy save around 40% of their monthly earnings. While that might not be realistic for you at the moment, that’s the target you should be going for. The more you can automate this the better. Get your employer or bank to automatically transfer a percentage of your income to your savings account. The key to this is that it’s automatic. You don’t get to touch the money. It doesn’t hurt as much.
Save to invest
Saving money. It’s critical, but you need to be doing it the right way and for the right reasons. On the path to financial success and true wealth you need to be saving for the right reasons. Grant Cardone is a massive advocate of saving to invest. This is as opposed to saving for ‘a rainy day’. This may go against the grain but hear it out for a second. Saving simply to save isn’t going to make you rich. True passive wealth and financial stability comes from investments, and you need to have a way to invest. Your savings should be kept for the simple purpose of being ready to put into an investment. It is the strong monetary position that investments put you in that should be your buffer from those ‘rainy days’ not a finite amount of saved up money. Investments (specifically good passive investments) provide consistent income streams that make bad days and emergencies not even appear on your radar. Keep that in mind: save to invest! Don’t just save for the sake of saving.
Note that saving to invest means you have that goal in mind. Having a purpose and reason to save makes putting money away much easier.
Wealth building made simple
Building substantial wealth does not need to be complicated. In fact, it shouldn’t be complicated. You do, however, need to know the ins and outs of how you should deal with your money. First, commit to financial wellbeing, then become obsessed with it. Do anything in your power to help yourself reach your goals. Keep your interests in mind when doing deals or making decisions. On the way to reaching your goals, keep your mind on increasing your income. It’s time to have big, giant problems, not tiny little ‘poor’ problems. Automate the way you save your money to make sure you really are saving. Finally, save to invest, don’t just save to save. Have a goal and purpose to your saving and you’re sure to be wealthy in the near future.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.