Jan 4, 2014

How Do I Get Rich?

What is your definition of rich?  

One of the first steps you'll need to take to become rich, is to define what the term means to you.  For many people, myself including, being rich is another way of say one is "financially independent."  In other words, the individual does not need to rely on an employer or outside source for the funds to live their desired lifestyle.

But your definition may be different.  Maybe its a big house, fancy car, and a whole lot of nice possessions!

Whatever the case, visualizing exactly what "getting rich" means to you is a vitally important first step.

Why do you want it?

Now, what is it about being rich that you are truly after?  Is it because you expect people to think better of you?  This can be done in other ways, some of which I've previously recommended here.  Or is it because you believe this will bring you happiness?

Wealth can bring happiness, but most successful clients I've met, some with net worth's well into the 9 figures say it can often be lonely.  Studies have proven that incomes in excess of $75,000/year have diminishing returns with regards to happiness.  Something to think about.

What are you willing to give in exchange? 

If you expect a get rich quick idea here, you may as well leave the page.  The truth is, you're going to have to work very hard to become wealthy.  A good way to begin answering this question, is determining a future date and financial amount you'd like to accumulate by this date.  You may then create a vision for what you'll plan to give in exchange for this future wealth, such as:

"I will become Senior Vice President of XYZ company, saving half of all future raises, and retire at age 58 in the year 2035 with $1,250,000."

Setting Realistic Goals

The above goal is an actual goal I helped a client with in 2011, and so far he is making tremendous strides.  He has paid off his auto-loan, fully funded his ROTH IRA for both 2012 and 2013, and is nearly maxing his 401k.  I would venture to say that he would not be anywhere near fully funding his  ROTH IRA and 401k if he had not set this clear and measurable goal for himself.

Slow and Steady Wins the Race

As you can probably guess by the title of the site, my 16 principles to getting rich will not get you what you desire overnight.  The method I suggest is easy to understand, but not easy.  It will take a daily commitment, and you'll need to remain aware of these principles each and every day.

Your Personal Situation

Now that you understand the framework, its time to diagnose your personal financial situation.

Ask yourself the following questions, and write the answers down.

Do I have any "non-mortgage" debt?

What is my gross monthly income?

What are my monthly expenses.

Now, a quick mantra I'd like you to memorize:

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."

My Crystal Ball

An easy assessment that will indicate your chances of success will be whether you are happy by the above definition, or miserable.  You will not be able to reach your goal of getting rich if you do not have discretionary income left over after your expenses.  Even if your monthly expenses do not exceed your income, I recommend you use this budget template I have my clients fill out to identify what "excess funds" you have each month for investing, and to help identify any "fat" to cut from your monthly expenses.

 With a clear understanding of where you stand, take a look at the 16 elements to my winning strategy here, and begin wherever you see fit.  If you answered yes to question One above, Step One, "Liquidate All Debt" is where I'd like you to start.

If you do not have any non-mortgage debt, steps three through seven are critically important for beginning your path to becoming rich.

If you are disciplined and focused on attaining the wealth you desire, you will succeed.  Revisit these principles at least annually and remember that getting rich is incredibly simple, but not easy.  

A closing "tip" I have for you is to write down your "vision" identified above in a place you'll see it both morning and evening.  I put mine on my car's center console.  Others have theirs on their fridge, or written on their bathroom mirror.  

You CAN succeed.  Begin now.

3 comments:

  1. The most important point in this article is "what are you willing to give up?" In reality, few of us have enough money to buy everything we want all the time. Thus , You need to figure out how to divert some of your earnings from today for spending tomorrow. It's easier said than done :)

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    1. Its amazing how many people I meet that have no interest at all of thinking about tomorrow. Its TODAY, NOW, or WHY would I save anything, I might not make it to my 50s or 60s!

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  2. A lot of great points. Rich is a relative concept. It can depend on wealth and money and hard work and discipline is the only way to get there. But rich can be so much more. Something that includes spirituality, family, belonging are riches that money cannot buy.

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