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On Becoming Rich

Many people incorrectly think that becoming rich is an impossible dream. When they mentally picture millionaires, they think of big spenders living lavish, glamorous lifestyles. In fact, as clearly shown in the research done by Stanley and Danko in The Millionaire Next Door the average millionaire is a very different type of person.

The average self-made millionaire is a middle-aged or older person who drives a moderately-priced car, is married twenty years or more to the same person, goes to church, owns or runs a business, has kids or grandkids, works ten hours a day and loves it. In other words, the typical American millionaire is an ordinary person who has achieved wealth and success over time, by working, planning and saving for it, and by practicing the strategies that millionaires the world over practice day in and day out. You can do the same!

The US free enterprise system creates opportunities like no where else in the world. We all have the freedom to take advantage of these opportunities. No matter what your background, you can become a millionaire! The eight powerful strategies below can help you develop a workable plan to reach your financial dreams.

Strategy #1: Treat money as a servant, not as a master

Jesus Christ said, "No one can serve two masters. You cannot serve both God and money." Money is a wonderful servant, but a terrible master.

Financial expert Robert Ringer cautions in his book Million Dollar Habits, "Instead of possessing money, what happens when an individual's goal is money is that he becomes possessed by money. Instead of keeping money in perspective, it becomes an obsession." An obsessive pursuit of financial riches will likely bring other problems, many significant in nature. For example, many people have sacrificed their health to gain wealth, only to spend their wealth trying to regain their health. A proper outlook on money is needed if you are truly to become healthy, wealthy and wise.

Strategy #2: Form wealthy habits

Have you ever wondered how some people become wealthy so easily? No matter what they do, money seems to gravitate to them. They have learned the millionaire’s secret of making a habit of making money. They live in such a way that making money becomes as natural and habitual as eating or sleeping. They habitually live in a state of wealth, demonstrated by their consistent actions. They save, dream, plan, invest and give in a never-ending cycle.

It has been consistently shown that the three most important habits you must adopt if you are to build a foundation of wealth and financial security are:

1) Spend less than you earn
You must make the best use of the financial resources you already have. No matter what your income, you should make it a habit to spend less than you earn. Everyone can reduce their expenditures without making a significant dent in their lifestyles. You should account for your personal spending and should often ask yourself how much of it was necessary and important? If you are like most people, doing a personal audit of your purchases for even one month will reveal that you spent a lot of money on things you didn't need, didn't really want, and may not even like.

2) Form a savings plan
This goes hand-in-hand with the first habit of spending less than you earn. Once you get your spending under control, you must form a savings plan, and begin tracking your growing wealth. Wealth is measured by how much you keep, not how much you make. Every time you receive income, set aside a portion of it to keep. You should always set aside at least 10% of your earnings and preferably much more.

3) Invest your savings
In order to truly become wealthy, it is essential that you make your money multiply by putting your savings to work through sound investments. Hoarding money will make you a miser, not a millionaire. The essence of investment is to generate wealth-creating opportunities for others and to share in the wealth created. The more wisely you invest the more wealth you create for yourself and others.

4) Learn to use leverage

Leverage is a key ingredient in maximizing your potential. By leveraging the time, talents, and money of others to grow your own basket of resources, you’re able to vastly increase the accomplishment you can realize in just a few decades. The use of leverage is one of the most powerful tools of those that become wealthy, and although caution must be used when employing leverage, it is a tool you must use to become truly rich.

Strategy #3: Find Work You Love

It has been proven time and again that the surest way to succeed financially is to love your work. Most of America's millionaires made their fortune not by running after profit, but by throwing themselves into work they adored. They viewed their work as a mission, and riches became a by-product. In order to truly find work you love, you must know what you want out of life, what you are most passionate about, long-term. One financial expert did a study of self-made millionaires to find out what set them apart from others. He concluded that the single most distinct quality about these wealthy individuals was their love of and absorption in their work. He stated, "Long before they knew whether they'd be paid enough to support themselves, they were caught up in their work and doing far more of it than they realized."

Strategy #4: Set Goals

The famous multi-millionaire Napoleon Hill, who wrote down Andrew Carnegie's secrets to wealth in his best-seller Think and Grow Rich, aptly stated: "There is one quality which one must possess to win, and that is definiteness of purpose, the knowledge of what one wants, and a burning desire to possess it."

Conversely, the failure to set goals is the surest route to financial failure. Indeed, the refusal to set clear, specific goals is the most common feature of the bankrupt and financially broke.

According to many studies conducted in the US, more than 95 percent of the people who consider themselves financial failures lack a financial plan. Conversely, the vast majority of those that are financially successful have a well thought out, realistic financial plan.

In addition to financial goals, those that become truly wealthy typically have goals for all areas of their life. In fact, there have been numerous studies that support this, and the top 3% of our society are the major goal setters, and their goals cover all areas of life.

Strategy #5: Practice Integrity in All Matters

One of the fastest ways to destroy your fortune and reputation is to engage in unethical practices. No matter how wealthy you are your wealth is never secure unless it has been built on a foundation of integrity. Many of the richest men in America have seen their financial empires disintegrate overnight because of unethical practices. To keep your wealth safe and growing, build your financial fortress and your life on a foundation of integrity.

Strategy #6: Invest in Your Education

Investing in yourself and more particularly your education not only brings high yields, but is also impervious to inflation, recession, and market crashes. Material possessions and investments can be stolen, lost, or destroyed. As the great entrepreneur Henry Ford stated, "If money is your hope for independence, you will never have it. The only real security that a man can have...is a reserve of knowledge, experience and ability." Another way to say it is, the more you learn, the more you earn.

You can put the wealth strategies of millionaires to work for you. The knowledge, habits and practices that have helped them become wealthy can also help you reach the same goal!

Strategy #7: Develop a “Get Rich Slowly Mentality”

Ask any of the truly wealthy and you’ll rarely find anyone that subscribed to the “Get Rich Quick Mentality”. The wealthy understand that the specific knowledge and expertise required to gain significant wealth takes time to develop, and that most wealth creation vehicles are complex and take time to truly get on a predictable path to wealth. Time is your greatest ally in gaining wealth. Having an unrealistic belief that you can get rich quickly usually results in disappointment and failure.

Strategy #8: Be Willing to Take Intelligent Risks

It is hard, if not impossible, to find a multi-millionaire who has not embraced the challenge of intelligent risk taking. Whereas taking risks without careful consideration of your personal circumstances and a healthy dose of realism can be akin to gambling, intelligent risk taking will separate you from the many who dream of becoming wealthy but never get off first base. The old rule of thumb, the higher the risks the greater the reward, is often true. As long as you learn what you need to know to mitigate risks, taking intelligent risks can lead you to much greater success than you would ever realize if you tried to "play it safe" all the time.


We hope that you have found this article useful and we welcome your comments and suggestions.

 

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Copyright 2004 by Key Business Institute, Inc. All rights reserved.