There is perhaps no more important decision than to take charge of
your own financial future. We live in a world of opportunity, and yet
most people are buried in credit card and other debt. We are
surrounded by people who are getting rich, but most of us are running
in place. If you can read this, you are literate, have a computer, you
are part of the "wired generation". You can become as financially
independent as you wish to be. Here are the Top 10 keys to your
financial success:
1. Decide to be financially successful. This is different than
wishing, hoping, wanting or even desiring to be rich. Make a
commitment that this is going to happen! Financial independence is not
an accident or matter of luck, and it usually requires some
inconvenience. Have you decided to achieve this goal?
2. Understand how money works. Most of us never studied finance or
investing in school. Most of us were never even taught to balance a
checkbook! To master anything, you have to understand it. Read. Study
what successful people do. Take classes.
3. Master your relationship with money. Some of us spend for
excitement, to show off, to prove we can. Some of us are addicted to
spending, and some of us are just careless about it. Whatever your
relationship with money, understand it and develop a relationship of
respect, appreciation and gratitude. Use it wisely!
4. Set specific goals. They should be challenging, but not
unbelievable, just out of reach but not out of sight. Challenge
yourself to be out of debt by a specific date. Make a commitment to
saving an exact amount each month.
5. Develop a budget. A budget is a set of dreams and aspirations. It's
how you really, really want to use money to benefit your family and
run your life. Budget to buy the things you really want, and to
eliminate the "impulses", the toys that waste too much of our income.
A budget is a map to your destination. Have one and use it!
6. Reduce spending. Yes, this comes after making a budget, because
when you begin getting control of your money (rather than the other
way around) you have powerful new reasons to reduce expenses. Most
self-made millionaires live far below their means! You should too.
7. Begin investing. Most of us spend or speculate. Both are roads to
disaster! Invest in things you understand. Invest cautiously, wisely,
and regularly. The objective is not to "make a killing", but to get
rich over time. Know and obey the distinction between gambling, and
putting your money to work for you.
8. Increase assets. Most people try to increase their income, and
that's a mistake. Making more money means paying more taxes. It takes
time and hard work. And, when wealth arrives in the form of cash, it's
easier to spend. Millionaires buy stocks and buildings, they invest in
assets that will make them rich – and that are hard to spend on a
whim!
9. Reduce taxes. Most people pay more in taxes than for food, clothing
and shelter combined! It is your largest expense! The poor and middle
class don't realize how much they pay because it's deducted from their
pay check. The wealthy know there are legal and appropriate ways to
shelter income, to invest in socially-responsible ways, and that the
tax code encourages this. Learn the tax laws and use them for your
benefit! (Yes, it's the most boring reading you'll ever do, and worth
it!)
10. Use your wealth wisely. Someone once said, "The reason most of us
aren't rich is that we'd spend it all on ourselves." Give. Share. Help
others. When you use money to make a difference, to have a positive
impact, you get the chance to do more. Being greedy and selfish will
not draw money to you. Investing in your community, will!
To begin your education about money and becoming a millionaire, I
highly recommend several books on the subject. Two of the best are:
"The Millionaire Next Door" by Thomas Stanley and William Danko, and
"Rich Dad, Poor Dad" by Robert Kiyosaki and Sharon Lechter.
Most middle-class people will earn well over a million dollars during
our working lives. Even if you start working as late as age 30 (after
college and a few years of kicking around looking for your niche) and
plan to retire a few years early, say at age 55, and assume your
average income is $50,000 per year, during those twenty-five years you
will earn 1.25 million dollars! With the combined earnings of husband
and wife, and perhaps having started work at a younger age or being
willing to continue into your 60's, the potential to earn (and pay
taxes) on several million dollars is very real.
Where does the money go? That is entirely up to you! As many observers
have noted, millionaires don't necessarily earn more, but they spend
less. They live below their means. They live well, but they do not
spend on items that depreciate, or on frivolous items to impress their
friends. They invest wisely, often in their own businesses, or in
stocks or other investments that they understand and are willing to
monitor closely. They take money seriously. And, they expect to retire
wealthy. They value money, and they pay attention to it. They manage
it. They accumulate and they let it work for them, rather than always
working for money, from one paycheck to the next.
The secret to becoming a millionaire? Do what millionaires do, and do
it over and over, until you arrive at your goal.
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