To have wealth, or to be wealthy is to have large amounts of money and possessions of great value. Although this $$$ is not the only means of wealth, it is the specific wealth I am about to discuss with you today.
Many people who have these expensive homes and luxury cars do not have much wealth at all. They may earn big or even huge incomes, but they spend it all mostly on unnecessary stuff. Then the other odd thing is that, many other people who have a great deal of wealth do not live in these uptown rich areas, or even drive the most luxury cars. Less than half the millionaires and rich people I know and study live in high-rent areas.
I must say this little small insight completely changed my opinion of wealthy people. I also want to be very rich, and I also wanted the biggest house in the most expensive area, driving the most expensive car. I must admit, that is what I thought it meant to be wealthy, but I was completely wrong. The less you need, the wealthier you are. The quality you offer to others, and the quality life you have is what it really means to be wealthy.
What most people, including me do not realize is, is that wealth is not the same as income or being rich. When you make a million dollars a year and you spend a million dollars a year, you are not wealthy and you are not getting wealthy as well. Wealth is what you accumulate, not what you spend.
The ultimate question we all have at the back of our minds are, how do I become wealthy then? It is at this point exactly where so many of us seem to get it completely wrong, we always seem to go in circles never getting to the main point of what it takes. In rare cases it is luck or inheritance or even intelligence that builds these fortunes. Real wealth is more often the direct result of a person’s hard work, his perseverance and most of all, his self discipline.
Who are the people that tend to get wealthy? It is the average person, people like you and me, that has a net worth of a million dollars or more, it is usually the businessman who has lived in the same town all his live. This person owns a small factory or a chain of shops or that has a service company. He or she has only been married once, or are still married, and they live in a middle-class area, next to people that has a fraction of their wealth. He is the compulsive saver and investor. He is the wealthy one.
So would you say that millionaires are dull people? By Hollywood standards maybe they are, but these dull people have something every important and exciting to teach us about money. They want to teach us that attitude is the greatest difference between millionaires and the rest of us that struggle every day to get by. They also teach us that they, the rich, follow certain rules, and here are just some of the most important ones they have, I am so glad to share these with you today.
1. First we have to live below our means, yes I said below, do not go above what you can afford, rather go below what you can afford. This proves to be true, as most successful accumulators of wealthy spend far less that they can afford on houses, cars, holidays and entertainment. Why would this be? It is very simple really, these kinds of expenses offer very little or no return at all. The wealthy would much rather put their money into investments or their businesses. You see, it is an attitude. As many millionaires would say, a luxury house is a bad investment. The reason for this is why would you pay $500 000 for a house when a $250 000 would suit you just the same. The extra $250 000 you could use to earn interest. They understand that when you buy a luxury house, you buy a luxury lifestyle that comes with that house. Your rates automatically skyrocket, along with the cost of services and insurance, and all the prices of nearby facilities such as grocery shops and a lot more tend to be much pricier as well. Some of these millionaires actually said that what is worse about that big house is the flood of problems and responsibilities that comes with it. I would say it is best to buy the house you are happy in, because you and your family love it, not because of the price tag it’s got.
2. The real wealthy man’s attitude can also be seen in his car. Some of the wealthy people drive old, unpretentious sedans or puck-ups. I have heard some say that they prefer to buy them by the kilogram, the biggest car that they can find, for the least amount of money possible. You really just need to get from one place to the other with it, point “a” to point “b” I always say, but still be able to enjoy the ride.
3. Start to emphasize on your net worth, and de-emphasize on your income. Millionaire’s success is measured by their net worth, and not their income. Instead of taking their money home, they prefer to plough as much of their money as they can back into their businesses; they share portfolios and other assets. Why do they do this? They do this because any government does not tax you on wealth, you get taxed on income. Therefore the more income you bring home for consumption, the more the government will take from you.
The people who pile up net worth the fastest, tend to put every cent they can into investments, they do not just consume it all. While of course, they reinvest their earnings from investments while watching their net worth soar, which is an attitude as well.
The best wealth-builders pay careful attention to their money, and they seek professional advice, they cultivate good advice. While those who spend heavily on luxury things like cars, boats and houses, they sometimes tend to skimp on good investment advice. These who skimp on luxuries are usually more willing to pay top dollar for good legal and sound financial advice. They are also constantly looking for new investment opportunities and possibilities. Most mysteriously, these wealthy accumulators seem to develop some sort of sixth sense for hidden opportunities. Some seem to learn of investment opportunities before they are common knowledge. Then they are shrewd enough to separate the good tips from the bad ones as well.
4. The self made rich also develop clear goals for themselves and their money, they develop plans. Whatever it may be that they want, whether it be to retire early or they want to leave an estate to their children, their goals may vary, but two things they all have in common is that they have a figure in mind, and they have an approximate date as to when they want it by, then they work unceasingly towards that goal.
All of us, who are millionaires in the making, should start to develop a plan, regardless of what age we might be. We must decide how much we want to accumulate, and by when we want it. Then we start to work backwards to meet our goal. How much should we save yearly to reach our goal?
One thing may surprise you, if you make wealth, not just income but wealth your goal, then the luxury house you’ve been dreaming about might not seem as alluring as before.
You will have the attitude. Every day holds the possibility of a miracle.