By simply changing the way you think about money, you can legitimately become rich within your lifetime. Matter fact, many people can do so within 10-15 years. Not too ironically, this is the average time it took the average self-made millionaire to build their wealth.. and you can too.
#1. Get a reasonable income and realize it is …reasonable. This one you probably already have down. It doesn’t have to be insanely high, it just has to be reasonable given your family size. Most Americans have a very reasonable income, but are convinced it’s not enough. Before you throw yourself in that category, understand that if you make $30-40,000 as a single, and maybe $60,000 as a couple with one or two kids… you’re done with step 1.
#2. Live BELOW your means to free up your income for #3. Regardless of what you make, there are millions of people who are living on less than what you are currently making. Think about your friends and acquaintances. Do any of them make less than you? I bet you can even think of some that have the same number of kids or are also single or married – whatever the case might be. If you spend everything you make each month, you’re living at or beyond your means. If you’re in debt, you’ve already surpassed your means. So you may need to rectify the debt or start forcing yourself to save some money each month to accomplish #2.
#3. Switch from an INCOME mindset, to a EQUITY mindset. You’ve already done this a bit if you’ve accomplished or are working on #2. The problem with income is that it will ALWAYS get spent. It doesn’t matter how much you make, if it’s income, it’s getting spent. However, EQUITY is what you keep. Anytime you build EQUITY you are increasing your wealth. Wealth is really just a measurement of how long you could survive without working. It’s a unit of time, not of money.
Equity in its simplest form is the cash in your savings account or perhaps a retirement account.
However, to become truly wealthy, you need to build or buy assets that produce income for you.
An example of building equity might be taking $6,000 and instead of buying a few new Apple gizmos, using that money instead to buy some vending machines and items to stock those machines.
You then place the machines in crowded areas and you produce a profit. The profit is initially INCOME. In other words, you took $6,000 and bought something that produces future income. Unless the machines break, they will continue to produce that income month after month. You have an EQUITY of $6,000 in those machines (their value) but you can’t spend machines. You CAN however spend the income they throw off.
The same is true of your investments. Ideally, you amass enough money in the investment account that you can “live off the interest.” That’s what wealth is. It’s not a high income… it’s owning a lot of income producing ASSETS.
Income producing assets are businesses, traditional investment products (stocks/bonds/etc), and to a small extent, cash in the bank.
Master these 3 steps, and you’ll never technically have to work again. The key here is that you have to stop thinking about income so much, and start thinking more about building equity. Something to think about.
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