Wealth-Building Wednesday — June 24, 2009 (Inaugural Edition)
Welcome to the first (of many, hopefully) Wealth-Building Wednesdays, where I try to offer you suggestions on how to build wealth. This would seem to be a departure from the many other fine personal finance blogs that devote a lot of their time and space to teaching you how to save money, be more frugal, and live beneath your means.
I, and a few others like 7 Million in 7 Years, focus, instead, on earning beyond your living.
Of course, taken to extremes, both points of focus can get you in trouble. On the one hand, you will have a really unsatisfying life; on the other, you may tend to forget about controlling your expenses and find yourself no better off with a LOT more income, but also with tremendous debt and expenses and a lifestyle that you may not even want.
Nevertheless, we’ll concentrate here in this special feature on building wealth from the income side. After all, income potential is virtually unlimited while expense savings are finite.
Plus, it’s my site and I’ll approach this topic how I want!
To be successful at anything, the most important thing you have to master is your mindset. Simply put, attitude is everything. You can have all the talent in the world, tools at your ready disposable, adequate funds, and everything else, and yet, you still could fail.
That’s how life works.
Not only do you have to work smart, you have to work hard. Look at nearly anybody you deem “successful.” They all “got there” through working smart, employing experts when necessary, using appropriate tools and resources, but there’s another critical thing they mastered:
Perseverance. “Sticktoitiveness.” Dedication. Burning the candle at both ends. Hard work is an acquired skill that you learn by practice.
This hard work is your front-end payment to a potential big payoff months, years, even decades later.
Even “overnight sensations” worked tirelessly for years, in most cases, to “make it” overnight!
Now that we got that out of the way…in case you missed it, it’s not good enough to work smart or hard. You have to work smart and hard.
Here’s a link to a book that might change the way you look at things. It’s called MindMap to Riches. It’s all about what I’m talking about here; it’s just a lot more detailed and lengthy in its description. By no means can I cover the how to part of creating a positive mindset in this relatively short post.
Suffice it to say it’s passion, hard work, being smart, making a plan, acting on the plan, and making corrections all along the way. Leave a component out and you may not make much progress, but put them all together and you’ve got a winning combination.
Only YOU can determine what success is. We’ve limited our scope here to say that success, in this context, is increasing your wealth.
What is wealth? From a personal finance perspective, it’s pretty simple:
Assets – Liabilities = Net Worth
The key to increasing wealth is limiting your liabilities to a manageable level while increasing your income-producing assets. As long as you can do that, you’re well on your way to amassing great wealth.
The pillars of a wealth-building system that we’ve described here are usually hard assets like your house, cars, precious metals, plus paper such as cash, money in the bank, stocks, and bonds. A vital component is a wealth-preservation instrument like liability and life insurance in case life throws you a knuckleball.
But the most valuable asset in your portfolio is YOU. You should think of yourself as an income-producing asset, striving always to become more productive through continuing education and training of the mind, body, and soul.
You are the ONLY one you can truly count on. Gone are the days of working for a company for 30 years, collecting your going-away gold watch and a nice little pension. Especially in light of the current state of the economy, you can be sure those days are gone — if not forever — for a very long time indeed.
If you’ve been here before, you know that I am a firm believer in running your own business. It’s difficult, but the rewards are usually worth it. The greatest benefit to me, however, is the idea that I am not relying on anybody else for gainful employment.
If I want more money, I go out and get it
I am not limited by my boss or a 40-hour workweek.
However, I know jumping ship on your career, no matter how tenuous the concept is nowadays, is not feasible for most people. This is where the smart work comes in. Keep your “day job” and do all your “own” business after hours. Of course, staying up late at night eventually becomes hard work, but you have to devise a plan to manage your time and health.
There are too many opportunities to mention that have potential for solid earnings. Private Label Rights publishing, ecommerce sites, ringtones, affiiate marketing, credit counseling and/or debt management companies — all of these have HUGE potential. Probably always will.
We’ll tackle some of these methods later in the series. For now, just find out what you can about setting your mental ship afloat. Determine what you’re good at, what interests you, what you’re passionate about! Get your head on straight and set yourself up for success!