You probably already know the principles for building lasting wealth. Most people do; yet, few people actually live according to them. Most people fail to build wealth because the rules are easy to understand but surprisingly hard to live by. Living them is the key – and also the problem.
So these ten tips probably will not impress you with originality and creativity. That is not the point. After all, if building wealth is as straightforward as I claim then this shouldn’t be rocket science. In fact, you probably already know most of what I am about to share.
1. Have a Plan. One of the biggest barriers to creating lasting wealth is not having a written plan. You cannot effectively build wealth without having a roadmap to get there. Time spent writing goals and building a step-by-step plan to achieve those goals is an investment in your future. It will reduce time wasted and will produce amazing results.
Every study on goal setting and planning reach the same conclusion. A 30 year study by Harvard Business School showed that the 3% with written goals produced 10 times the results when compared with the 83% with no clearly defined goals. A 10 fold improvement is worth planning for.
Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product.
2. Live Below Your Means. Easier said than done, right?
Most people that have build lasting wealth didn’t do it overnight. They got wealthy by setting goals and striving to reach them. One of those goals was to live below their means.
No matter how much money they made they continued to reduce expenses, sometimes living at below 50% of their income! It is a discipline that many of us never master, but I believe it may be the most important of the four. You cannot afford to save, or have the funds to reduce your debt, or protect your wealth if you are living paycheck to paycheck.
3. Control Debt. I can’t even begin to tell you how much I hate the crushing misery of debt. The interest you are paying on debt, is money that cannot be saved or invested-it’s just gone. Debt can be used wisely, for such things as buying a house. If not used wisely, it can quickly get out of hand.
Your ability to create lasting wealth is dependent on your commitment to using debt judiciously.
Lots of people are mired in debt. Often, they could not control the causes of their debt. Many people get into serious debt from unemployment, medical bills or divorce. Unfortunately, many people get into debt from not controlling spending or not planning for future.