03 May Four Foundational Principles to Help You Build Wealth
If you’re reading this post, you must be interested in making some money. And you’re probably not only interested in making money, but also in building wealth. There is a lot to know about building real wealth. It can seem overwhelming and daunting. You’ve probably heard that you need to have an emergency fund, get out of debt, invest, give, prepare for your child’s college, and more. Add all of that together and you have a recipe for serious overwhelm!
Throughout the year, I host many seminars and conferences. And almost every single time, I’m asked how to build wealth when you don’t have any money. It’s almost as if there’s a secret and these people believe that I know the answer. So, because I have some experience with how to build wealth, I’d love to get back to the basics with you today and share four key principles.
Yes, there will come a time when you need to learn to invest and prepare for your child’s future. You will also need to learn about things you don’t have much interest in now – like stocks, insurance, different kinds of savings and investment accounts, and more. But if you don’t know these four foundational principles, you will have trouble truly building wealth. Ready?
Four Foundational Principles to Help You Build Wealth
1. Invest in Yourself
Jim Rohn once said, “You don’t take time to the marketplace, you take value. So make yourself more valuable.” The same is true for building wealth. The first place to invest is in yourself. This will increase your income.
What do you need to learn before you really dive in? Do you find that you get easily caught up in a certain wealth-building stage? Do you have misconceptions or hindrances when it comes to money? Think about these questions and get to know yourself. Then, invest in education, counseling, resources, and tools.
For example, maybe you know that you need a working budget but have never been able to stick with it. Maybe it’s time to invest in a budgeting tool or take a budgeting class online.
Or, maybe you need a big-picture view of wealth-building and the pathway to get there. Find a great book and start reading. Get inspired and then take action!
2. Learn to Live on 70%
I know. This doesn’t sound fun and maybe even sounds impossible. But it can be done. You may need to get creative. But if you can learn to live on 70%, you’ll be on your way to some real wealth-building! The other 30% has a very specific purpose. You’ll break down the remaining 30% into three categories.
You will invest 10%. You will also give 10% to someone else to invest (a professional). And finally, you’ll use 10% for regular tithing.
Need some creative ways to make a little extra to live on 70%? Consider some of the following:
- Sell unused possessions on Ebay or Amazon
- Look through old textbooks and sell those you no longer need
- Have a yardsale
- Quit going out to eat
- Scale back your driving by staying home on the weekends
- Say no to extracurricular activities for your kids for a season
- Make a grocery list before going to the store to help with impulse buying
- Find a friend to hold you accountable to a no-spend challenge
3. Learn the Difference between an Asset & a Liability
Here is the very basic difference – an asset increases in value over time, while a liability decreases in value over time. If you don’t understand these two terms, you need to go back to step one and invest in some education. Why? If you’re spending your hard-earned money on liabilities, you’re making a huge mistake. Instead, spend wisely by purchasing assets, and then use the money earned from the asset to make other purchases.
To drive this point home, think of the difference between purchasing a car and house. A car depreciates in value while a house increases in value. So again, an asset puts money into your bank account while a liability takes money out of your bank account.
4. Learn to Eliminate & Avoid Consumer Debt
We are taught from an early age how to be consumers. The word “consume” means to “destroy.” What are we destroying? Well, quite frankly we are destroying our ability to build wealth. We should spend money only on things that are actually important to us – things that bring joy and value to our lives.
When was the last time you reviewed your debt situation? How much consumer debt are you dragging around? How quickly would it take you to pay off the debt? Click here to read a post about eliminating debt once and for all! Your life – and your ability to build wealth – will be forever changed.
I hope that these foundational tips give you incentive to get started today. A GREAT place to start is my book, Money Mastery. I teach you incredible principles about my Triple-X method for building wealth and eventually being able to give a ton of money away. Believe me, if you need some inspiration to get started, this book would be a great place to begin.
Also, sign up below to grab a FREE checklist of 15 ways you can save money this month + 15 ways you can make extra money this month. It’s super practical and doesn’t include anything about taking online surveys. I believe you can do this. This checklist would be a great practical step towards building real wealth!