Save, Save, Save - Don't Spend, Spend, Spend
Too many reality TV shows promote lifestyles of the rich and famous. If you want to grow your money forget about keeping up with the Kardashians!
The fact is, many of those reality stars end up declaring bankruptcy because they can’t afford to maintain their insane spending habits – and it’s not just b list actors that should beware. Heavy hitters have lost fortunes too!
Francis Ford Coppola filed for bankruptcy protection in 1992. How could this be when his assets were estimated at $52 million? Well his liabilities were a staggering $98 million!
Oops. His film “one from the heart” flopped sending him into a financial tailspin.
Easy come…easy go?
Live below your means. It’s the best way to accumulate wealth.
Life Is An Opportunity to Learn and Reading is Fundamental!
University is a great achievement, but people who are filthy rich know there is no end to life’s lessons.
It’s great for brain health and it also increases your knowledge base. More knowledge opens up more opportunities.
Only 11% of those people read for entertainment.
Most of the materials they purchased are related to current events, education and career!
That says it all really. Why not pick up a copy of “The Four Pillars of Investing”? Jack Bogle, Founder of Vanguard and pioneer of index funds, highly recommends it!
You Will Have Read 1 Million Words
If you read 15 minutes per day over 1 year!
Invest As Much Money as You Can Afford and Diversify Your Assets
Most people pay their bills and save what’s left. You really need to examine this mindset.
Investments should be a priority. They are the key to your future.
The super rich quite often only dedicate a small portion of their earnings to living expenses (remember what I said about living below your means?).
…and diversification is very important, because if something goes belly up you want to have a safety net. A bull market has a tendency to lull people into a false sense of security, but a bear market is just around the corner.
So you need to know when to get out!
Don’t put all of your eggs in one basket – investing too heavily in one particular sector leaves the door open for financial collapse. If the stock market makes you nervous you can always think about putting your money in index or bond funds. Solid financial planning is very important when it comes to your investments.
I think that the first thing is you should have a strategic asset allocation mix that assumes that you don’t know what the future is going to hold. Ray Dalio
Sh!t Happens and Life Insurance Keeps The Creditors at Bay
Wealthy people buy life insurance. They know situations change and bankruptcy may only be a bad business decision or death away. Life insurance provides a safety net that will protect your loved ones should you pass away due to unforeseen circumstances.
You don’t need to be a mogul to benefit from life insurance. If you have debt, a business or dependents –a term policy is a no brainer. Why expose your family to disaster if you don’t have to.
Heath Ledger is a great example of a star that thought about life insurance despite his fame and wealth. He had a $10 Million policy in his daughter’s name.
Unfortunately there was a glitch. He failed to disclose his drug habit and a speeding ticket – so the life insurance company (Reliastar) contested the claim. They ended up settling out of court.
Thinking About Generational Wealth?
Life Insurance Can Be Used to Keep $ in the Family
The wealthy are great at planning and this is reflected in their financial status. In order to keep money and assets in the family, a life insurance policy may come in handy.
Are you scratching your head wondering how money after your death can help you?
Depending on where you live your assets may boot your estate out of the Federal Estate Tax Exemption. Don’t forget there are state taxes too and they vary greatly in terms of exemption limits. If you own a business, have a house that has appreciated greatly over the years or maintain valuable assets you may be worth more than you even know.
Let’s say you own a beautiful home or have costly belongings that you would like to leave to your kids. Take some time to consider the tax liability. Will they be able to afford the estate tax or will a sale be the only option?
A strategically purchased life insurance policy in your beneficiaries name could be used to cover the estate taxes and burial expenses and the good news is it will be separate from your estate and tax free!
With a little planning you can keep treasured assets in the family.
To give you an all-star example check out what happened to Prince. He left no will and did not shelter his assets. His estate was not liquid with only $110,000.00 in cash and $830,000.00 in gold bars.
The majority of his holdings were in music and real estate – which his family may have to sell off to settle their obligations.
Have an Emergency Fund
Life is unpredictable.
Wealthy people understand this, so they have enough liquid funds to cover the tough times.
If you are living paycheck to paycheck, it is so easy to bottom out. Something as simple as losing a job could throw you into financial mess that might be difficult to extricate yourself from.
Kim Basinger is a great example of this. She signed up for a movie and didn’t care for the script. She requested revisions, which were denied. When she realized that the movie was going to be a clunker she pulled out and was sued for $8 million! The result was Kim Basinger filed for chapter 11 in 1993.
Ok – so that would have had to be one BIG emergency fund. But you get the point.
If you want to grow your wealth, work at saving 6 – 9 months worth of expenses. That way if something unforeseen happens you will have the funds to cope with it.
You can do this step by step, so don’t freak out when you read this. Keep calm and save on!
Recruit an All Star Team of Advisors
Come on, admit it, you think you do a good job on your yearly taxes…but there are people who live and breathe the ever-changing tax rules and regulations.
No matter how much you think you know, they know more (if you have a good tax planner).
The wealthy know how to use the tax laws to their advantage and you should have this information too.
There are ways of maximizing your investments to decrease your tax obligations.
Run, don’t walk to your next meeting with your CPA. It can really change how you approach your money.
…but remember not all CPAs are tax specialists.
Psst. While you are at it don’t forget to find a fabulous attorney and financial advisor! Before you start to shake your head, I am going tell you that these professionals are worth their weight in gold.
Yes, you have to pay for their advice upfront and often that advice is costly….
….but they can save you a TON of money and frustration. All in all, the hassle and cash saved makes their fees look like a pittance in the end.
For example, let’s take a look at the president. Donald Trump declared bankruptcy in 2009 after defaulting on a 3.5 billion loan. His asset to debt ratio was $50 million/$500 million.
He must have had an all-star team of advisors to navigate the ins and outs of the laws governing finance and taxation to make it to where he is today.
Trump's Businesses Owe $1.8 Billion to More Than 150 Different Institutions
Time is Priceless & Trading Dollars For Hours Can Keep You Down
Trading dollars for hours is not what you want to do if you are aiming to be super-wealthy.
You can’t put a monetary value on time. It’s priceless, because in reality we all have so little of it.
If you look at the world through that lens, it sheds new light on everything you do and how you do it.
Each and every one of us has a talent that makes us unique. Why not maximize your strengths and break out of trading dollars for hours?
Are you finding yourself buried in administrative tasks that are keeping you from moving forward in your business or career? How about getting some help? Hire someone who excels in administration and get back to the core of your work.
This simple move will free up time so you can make more money. It’s a win-win! Think about starting a business. Most wealthy people work for themselves.
There are extraordinary tax benefits and your earning capacity goes form limited to unlimited.
The key is in not spending time, but in investing it. Stephen R. Covey
Create Multiple Streams of Income
Much like investments, putting your eggs all in one basket can be detrimental to your bottom line.
Wealthy people know this, so they usually create multiple income streams.
There are many ways to achieve this – stock dividends, freelancing, consulting, courses, products and more.
Just think what your bank account would look like if there were many different sources of income trickling in.
Before you know it you are living the life!
Did you know that Arnold Schwarzenegger obtains most of his current income from real estate investments he made before he became a Hollywood star?
To obtain financial freedom, one must be either a business owner, an investor, or both, generating passive income, particularly on a monthly basis.
Network and Surround Yourself with Super Successful People
Opportunity is a big part of the equation!
If you surround yourself with people who are lacking motivation, it’s pretty tough to get ahead.
What better way to find out how to get wealthy than by talking to people who have actually reached those goal posts.
It’s likely that you will feel more motivated and pin down more chances to fulfill your dreams if you spend time with those that have a similar mindset.
Robert Kiyosaki says, The richest people in the world look for and build networks, everyone else looks for work.
Invest and Take a Step Back
The wealthy do not typically jump from investment to investment.
They are usually in it for the long haul – which means they put their money away and forget about it.
Hey don’t get me wrong, that doesn’t mean you shouldn’t place stop loss orders on your stocks or that you should ignore your investments.
That being said, obsessively checking your investments isn’t the answer either.
The best thing to do is to review your statements monthly or quarterly. This will allow you to be in the know without agonizing.
Listen to the words of the great Jack Bogle (as applied to index funds).
As I have said before, the daily machinations of the stock market are like a tale told by an idiot, full of sound and fury, signifying nothing,” Bogle added. “One of my favorite rules is ‘Don’t peek.’ Don’t let all the noise drown out your common sense and your wisdom. Just try not to pay that much attention, because it will have no effect whatsoever, categorically, on your lifetime investment returns.” Marketwatch, Shut Your Eyes and let the Indexes do the Work
Focus on Earning More: More $ = More Savings
Yes you heard me right. The way to get to the top isn’t to put away every penny from an average job.
This isn’t to say that saving is not extraordinarily important, but if you really want to be wealthy you are going to have to think outside of the box.
All of your energy should be put into creating new and more lucrative opportunities.
An increase in pay is one of the best ways for you to finance everything you want. As I mentioned above, time is is priceless. Don’t accept a wage that is far less than you deserve because you are afraid to push the envelope.
Way too many people underestimate their worth. Reassess your situation, concentrate on your talents and renegotiate your wage.
I agree with Balzac and 19th-century writers, black and white, who say, ‘I write for money.’ Yes, I think everybody should be paid handsomely; I insist on it, and I pay people who work for me, or with me, handsomely.
Minimize Your Income and Maximize Your Assets
Ok this is wonderful…you followed my advice and just doubled your income from $50K to $100K!
…hold on a second. A lot of that money will be eaten up by taxes. So what’s a fledgling rich person to do? See your financial advisor and maximize your investments to defray the tax hit. You don’t have to fork all your money over to the taxman.
There are ways to shelter your new found money. Investments create wealth.
Keep your eye on the prize and put your money into real estate, stocks and bonds and as I mentioned above don’t forget to get some solid advice.
Remember: “The hardest thing in the world to understand is the income tax.” Albert Einstein
Ditch the Naysayers
Do you have a lot of negative Nellies in your life? If so, oust them now!
Wealthy people don’t keep a ton of energy draining people around.
That’s because they sap you of positive forward momentum and you my friend will need every last drop of positivity to become filthy rich.
Surround yourself with people who energize and believe in you.
The secret sauce to true success is building a solid foundation to support you through the tough times that you will inevitably face on the road to wealth.
This also applies to people you work with and work for you as well!
In order to carry a positive action we must develop here a positive vision. Dalai Lama
Maintain a Positive Mindset
Ousting the naysayers isn’t the only step you need to take.
You too need to be filled with confidence. Self-criticism and doubt are deal breakers when it comes to attaining your goals.
I always knew I was going to be rich.
I don’t think I ever doubted it for a minute.
Warren Buffett, Berkshire Hathaway
Believe in yourself!
It’s everything. If you don’t think you are going to wealthy and successful it will be pretty difficult to convince anyone else.
Persist, Especially After Failure
So many people give up after one failure. If you want to be wealthy, you have to pick yourself up, dust yourself off and figure out what lessons can be learned.
I’ve learned that it doesn’t matter how many times you failed,” Mark Cuban tells Smart Business. “You only have to be right once. I tried to sell powdered milk. I was an idiot lots of times, and I learned from them all.
Persistence is integral to business success. It’s the best way to learn lessons that make you well versed in your particular arena. Wealthy people don’t stop when the going gets tough. Perfectionism Will Keep You from Achieving Your Goals
The other 29% were more likely to find success the 2nd, 3rd or even 10th time around! Persistence pays!
Perfectionism Will Keep You from Achieving Your Goals
Sure we all want to put out a fabulous product.
Unfortunately, too many allow unrealistic expectations to paralyze them. It becomes an excuse not to move forward. No project is without glitches.
If you wait to make it “perfect” you will never get to where you want to be.
sloppy success is better than perfect mediocrity. Alex Mandossian
Wealthy people know there is no such thing as perfection and they move ahead anyway. This is how great success is achieved.
Create a Corporation and Let It Pay You
This will give you more control over expenses and taxes. Who doesn’t want that?
Sure there are some cons to creating when it comes to creating a corporation, but administrative responsibilities and laborious record keeping aside, this is a great way to accumulate wealth fast.
…BUT don’t forget:
There is no place where self-discipline plays a more important role than in setting your own salary. As the owner and founder, you can allocate as much or as little of the company’s profits as you want to your own paycheck. Ameen Khwaja, What to Pay Yourself, Entrepreneur
Pay Off Your Credit Cards Every Month
You can use your credit cards, but spending money you don’t have isn’t a wise idea.
Wealthy people maintain credit cards, but they don’t run balances on high interest cards.
If you continue to use your credit cards, you build up a positive history – but clearing the debt before interest comes due is smart business sense.
There is no way to get around it, 19% interest really is a staggering amount of money to pay.
And by the way, it’s a myth that you need to carry a balance on your credit cards to get a good credit rating. So just don’t do it!
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Define What Wealth Is for You
We don’t all have the same idea of what wealth really means. For some it’s a spacious 4-bedroom house in a great neighbourhood and for others it’s having multiple homes and a private jet. What do you consider rich? Sit down and think about what your ultimate goals are. It’s easier to motivate yourself when you know what it is you are shooting for.
Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. Ayn Rand
Make a Plan
Now that you know what wealth means to you, you are in a position to make a plan.
Wealthy people don’t fly by the seats of their pants.
Create goals and stick by them long term.
Even if you do it step by step, before long you will make huge strides towards attaining the things you want the most.
When defeat comes, accept it as a signal that your plans are not sound, rebuild those plans, and set sail once more toward your coveted goal.
Sweat the Small Stuff
It’s amazing how fast little expenses make a dent in your wallet.
Hey I’m not saying that you should lock yourself in your house and avoid every Starbuck’s.
Enjoying life while you are living is a very important part of being happy. So no lectures on giving up your coffee and making drip filter at home.
…BUT the fact is, little things build up and generate one big bill!
Within reason, each and every dollar can be rerouted to make your dreams come true. Why not take a cold hard look at your spending and opt out of frivolous expenditures. It will make for a more fulfilling future.
I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too. Steve Martin
Shop Smart – But Don’t be Cheap
Sales are your best friend. Wealthy people don’t usually rush out to buy the newest and most expensive item.
Hey why pay more than you have to for necessities? Outlet shopping and waiting for black Friday really can save you a bundle in the long run.
That being said, don’t be a cheapskate! Yeah that $20.00 cardigan seems really affordable now – but when it falls apart in 6 months and you have to replace it – you had better tack on that cost.
If you buy good quality clothing, furniture etc. it will stand up to the test of time. This has to be factored in when you decide to purchase something.
Frugal people understand that paying more doesn’t necessarily mean better value. People labeled as cheap wouldn’t pay a premium price regardless of the value. Billionaire investor Warren Buffett is often labeled as frugal. Investopedia, How to Tell if You’re Cheap or Frugal
Automate Your Investment Contributions
Don’t leave your payments up in the air. The best way to be sure you add funds each and every month is to automate them.
Make a commitment to the amount of money you would like to dedicate to your future and stick to it.
Automation has made this process painless.
Set It and Forget It investment strategy using low-cost index funds should be part of your next New Year’s resolve. Automation is the key to a successful savings and investing plan.
Rick Ferri, Set It and Forget It Works, Forbes
Remember You’re In Control
Too many people feel like they are at the will of their surroundings.
Do you have a “bad job”? Change it! Are you being paid “too little”? Change it! At the end of the day, you are in control of your destiny.
Wealth can be yours now if you make a plan, put our suggestions into operation and put your nose to the grindstone! Try it and you will see.
You are the master of your destiny. You can influence, direct and control your own environment. You can make your life what you want it to be. Napoleon Hill, Think and Grow Rich