There are so many things involved with building wealth that it would take
much more than one article to explain it all. So, we've put together a simple
five-step guide to help you get a great start in building wealth for a lifetime.
Step 1: Set Specific Goals
Goal setting is a task that can be easily put off - especially when you are
extremely busy in day-to-day activities. However, goal setting is the first and
one of the most important steps you'll take to achieve wealth. Set both
short-term and long-term goals. Short-term goals may be daily, weekly and
monthly goals. These should reveal where you would like to be financially by a
certain time in the near future.
Long-term goals include the amount of wealth you would like to accumulate within
a year, two years, or maybe even five or ten years. Both types of goals are
necessary to build wealth. Without goals, you are wondering blindly with no care
or thought of what's ahead. This pattern of life is sure to leave you
empty-handed!
Step 2: Create a Business Plan
Every successful business from the past and today started with a plan. Your
business plan should illustrate where you are now, where you plan to be in the
future, and how you're going to get there. Write these few notes down on paper.
Then, fill in the blanks to create a rough business plan. It's easier than you
think.
*Your current income
*Business profits and expenses (if you already own a business)
*Business budget (or personal budget if working for someone else)
*Capital needed upfront to promote and operate business
*Plans to acquire the capital needed (source of capital)
*Spending plan (promotions, supplies, inventory, online expenses, etc.)
*Expectations (What results do you expect from your initial efforts?)
Creating a business plan is a necessary step to build wealth through your own
business. Even if you don't own a business, you should write down a similar plan
to reach your personal wealth goals.
Step 3: Avoid Harmful Debt
Debt is the one of the key reasons many people never accumulate wealth. But
remember, there are two types of debt: harmful debt and necessary debt. Harmful
debt is the debt you create for things you do not need such as excessive
shopping, luxury items, expensive cars that you can't afford, etc. Necessary
debt is a debt most people must have to live, such as a mortgage, car loan
(affordable), medical, college, etc. These debts are a part of life for most
families and will be for many, many years. However, even these types of debts
should be kept well within your income limitations. If you can only afford a
$250/month car loan, then shop around until you find one at this price. Don't
give in to the temptations and pressures to buy the fancier, more expensive car
with a $450/month payment. It's not worth the risk!
You may ask, "I thought these steps were for building wealth?"
As it happens, debt is the opposite of wealth. The more debt you have, the less
wealth you will accumulate. You can't save money or invest money that belongs to
someone else. If you earn $3,000 in income this month, but owe $2,000 in loans
(before everyday living expenses), you can't possibly have extra money to save.
You must either earn more or sell some items to pay off your debt. You should
avoid this "debt trap" if you intend on building wealth for the future.
Another type of debt is one for your business. You may take out a small business
loan to get things started or to promote your business. If you are uncertain
about whether the business will bring profits, try to avoid business debt until
you have tested it a while.
Step 4: Develop a Personal Plan
Above, you developed a business plan. Now it's time to create a personal plan.
What tasks will you do daily to build wealth? Put yourself on a schedule and a
strict budget. Work toward your goals daily by making a list of things to do and
marking off each item on the list as you complete the tasks. In your budgeting,
include a set amount of money you will put away in savings (savings account,
IRA, stocks, bonds, etc.) If you plan to invest, be sure to diversify your
investments. Choose only one or two high-risk investments and several "safer"
investments such as mutual funds or bonds.
Step 5: Stay focused on the Goal, not the Circumstances
No matter what circumstances you find yourself in, keep your eyes on the
wealth-building goal ahead. Even if sales are down in your business, don't stop
dead in your tracks. Remember, businesses have ups and downs. If you remain
steadfast toward your goal during the slow times, the busy times are bound to be
much better than ever. Your income will grow and you will have the extra money
needed to reach your wealth-building goals.
In a nutshell, building wealth does not happen over night with one
get-rich-quick program. It happens with consistent labor toward the goals and
tasks you have created. You can build wealth for your future if you do not waver
from these basic truths that have worked for millions of others!
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