In the first part, we explained the first 7 principles for getting and staying rich. Here comes the other 7 ones that go deeper into the subject, making easier for you to understand the entire concept of wealth. Because, it’s not only about proper money management. It’s about making the foundations to create and sustain wealth and that goes far beyond just dealing with the money. It’s about a series of decisions and habits. It’s about you and the life you’re living.
Here we go.
#8 – Set specific financial goals and timestamp it
Which of the proposed options is more likely to be accomplished in 3-year timeframe?
Option #1: I want to be rich.
Option #2: I want to make $3M in next 3 years.
The problem with the majority of the people is a complete absence of precise vision and mission. Sure, everybody wants to live their life in absolute abundance but for the most part of it, that’s just daydreaming.
When you dissect the wish of becoming rich and set the specific set of financial milestones (i.e. $1M in next two years; $2M in third year; $20,000 in next 6 months), the entire process becomes more tangible. From pure daydreaming to an actual plan on account of specific milestone(s).
In addition, breaking up the large milestone in several smaller ones, make the process of planning that much easier. For example, if your goal is to ensure the financial stability for your family, you’re better off setting the price amount at the beginning of the sheet, plan from top to bottom and execute from the bottom to the top.
How do you plan something like that? How do you plan precise financial milestones?
At this particular moment, your mind probably has no clear vision about the wealth. You need to clear away that fog and the best way to do that is to take the piece of paper and write a lump sum; first that comes to your mind.
Let’s say that your lump sum is additional $100,000 per year with the tendency of gradual growth over the specific period of time.
So you take the pen and put that number on the top of the paper. That’s your imminent or big financial goal. If it’s something that seems hard to accomplish, you need to break it up on months, weeks, days and even hours.
This breaking-the-sum down process will lead you to the smallest goal and that can be — and watch this now — $0.38/hour!
You need to make exactly (only) $0.38 per hour to make $100,000 in one year!
Can you see the advantage of precise financial planning now? From no clear vision of what you even want, to precise micro-plan (goal) of making additional $0.38 net for the period of 1 year in order to generate $100K.
#9 – Wealth is a mindset and not luck or stupidity
You win the lottery, bringing home the astonishing $5,980,570. You’re rich over the night just because of the lucky combination you bet on the other day.
So you come home, your heart is pounding like never before, and you and your wife burst into tears. Finally! You say. It was about a goddamn time that something lucky and beautiful happens to you. God only knows how you deserve that money.
OK, let’s say you do.
What you’ll do with that money? Have you ever thought about it? You’re most likely betting or playing the lottery, but have you ever spent some time learning what to do with those money when/if they come?
You see, 97% of all major lottery winners not only manage to spend the entire winning in less than 3 years, but also end up in debt!
That’s the statistic and the only reason behind this tragic rule of thumb is the absence of the monetary wisdom and proficiency. People rarely think beyond tomorrow and that’s the sad reality.
So the wisdom in this case would be to do anything with the money and spend 2 years if needed, learning what to do with all that money. Only then should you slowly start to work with that money in an attempt to make the more of it. You don’t just spend it like a maniac and you don’t keep it in the sock because it’s losing its value.
And the true value of the money is its basic purpose: it’s used to make more of it!
That’s monetary wisdom and financial proficiency.
#10 – Be extremely picky about the advices, you’re receiving
Advice can be given in the best possible intention, but that doesn’t make it the correct one. Even what you’re reading right now should be taken with certain caution because not everything will work for everyone.
You should take only bits and pieces and assemble the greater conclusion from what you consider that applies to you. But to do that efficiently, you need to know yourself and the subject to some extent.
In terms of wealth creation, the subject is broad and you have to learn many different aspects of it – such as financial instruments, monetary market, banking systems, investments (short term, medium term, long term, low risk, medium risk, high risk) but most importantly, how to make the seed money for future investments.
Same as you can get hooked on a wrong advice when it comes to investments in classical terms, you can take the inadequate or completely wrong business advice in terms of direct money generation through the sales.
These are only examples of the subjects and individual topics relative to the creation of wealth. It’s imperative that you learn your environment BEFORE you start taking executive advices.
#11 – You can’t get rich quick. Even if you see examples, you have to learn the background before drawing the conclusion.
Because, what hides in the background is in fact the set of mechanisms that enabled fast money generation. Take any of the in-demand products that generates millions over the single night and if you take a closer look, you’ll find out how millions of dollars were invested over the extended course of time to make that happen.
Even if you stumble upon the example of some “quick success”, you have to be aware of the fact that the person or team behind the success had mostly likely invested immense amount of time learning and perfecting the essential set of skills.
Get rich quick is the ultimate desire of every human being on this planet and it’s derived from our awareness of the limited time we have on this planet. We tend to want it all and now. Patience is out of the question.
As the result, 80% of the entire human population are walking the thin line between comfort and famine. 30% of that 80% don’t have a roof over their heads.
All of those who seek for the quick buck are doomed to fail because the set of actions they set in motion acts counterproductive because the system is designed differently.
It takes time and patience to build the wealth that lasts and multiplies.
#12 – Be wary of procrastination because it has the power to not only undermine your efforts, but also to destroy everything that you’ve worked for and achieved until that moment.
Procrastination is nothing more than the empty reservoir. It’s like taking a car or a plane and use up every last drop of fuel and then not refilling it. It will stop.
And here lies the core cause behind the fact that the higher you fly, the more dramatic and painful the fall is. Because, there’s a difference between the car and plane. The car will stop. The plane will crash.
So we can say that the pain you’ll suffer is proportional to the level of success you’ve reached. If there’s something you would want to avoid when in the middle of the wealth creation process, that’s an empty reservoir.
Unfortunately, too many men suffer this tragic destiny. They fail to prepare themselves psychologically to endure for a long period of time and at one critical point of their progress, they burn out, not knowing how to re-light their fire once again.
The conclusion is simple: before you decide to push over your current limits, spend some time preparing for the marathon. Because it’s what it basically is, same as marriage. It’s a marathon and not some short and quick race. Understand the procrastination in order to tackle the problem on the go, once it appears.
#13 – Self-educate on daily basis without pause
One of the main reasons behind the success of Warren Buffet and his long lasting business partner Charlie Munger is their willingness to become general experts. Their success is not something random or lucky. It’s a slow and determined process of self-improvement in many different disciplines.
Because you can make the lucky shot, investing your money in a wonder of the decade, but the true mastery is staying at the top or constantly progressing.
The critical aspect of wealth generation is the constant education with a wide array of subjects. For instance, if you choose to invest your money, where will it be? What industry? How do you assess a certain commodity if you know nothing about it? How do you pick between gold and wheat? When to buy and when to sell?
It takes lots of efforts to learn the landscape in order to make at least some educated guess in a market dominated by speculations and direct influence. You need to learn the environment to understand how things work in a specific segment of the market.
That’s why the learning process must not be focused around a single subject.
#14 – Enjoy the ride while you’re here
The last wisdom is the most profound one at the same time. In their pursuit of wealth, people tend to forget about things that truly matter. They tend to forget that the sole purpose of life is just that: to live.
Not to save money like some frugal maniac. Not to lock yourself into the office and never leave. Not to bust your ballz without compensating.
And here lies one of the reasons behind procrastination also. Sudden progress and growth act like motivators, but only for short burst. You have to find something to compensate. Fail to do that and you’re risking your engine to burn all the fuel 20 miles from the nearest gas station.
The best way to do that is to spend the portion of your money on yourself. Indulge your urges and desires. Exhibit the hedonist in you. Treat yourself with only the best and that will keep you running same as the nuclear reactor is keeping the submarine operational for decades – if not even centuries.
What you have in your hands here are 14 philosophies (principles) of wealth creation. Use them wisely and apply each to the extent you find suitable. Remember that not everything fits everybody. Every time you stumble upon something like this, you have to take some time and analyze it thoroughly. Take bit from this and piece from that, and you’ll have your detailed roadmap.
That’s the bottom line here. Use your brain potentials. Think logically and not emotionally (sleep on it). Invest in personal education more than in anything else. And by all means, have fun!