There are so many things involved with building wealth that it would take much more than one article to explain it all. So, we've put together a simple five-step guide to help you get a great start in building wealth for a lifetime.
Step
1: Set Specific Goals
Goal
setting is a task that can be easily put off - especially when you
are extremely busy in day-to-day activities. However, goal setting is
the first and one of the most important steps you'll take to achieve
wealth. Set both short-term and long-term goals. Short-term goals may
be daily, weekly and monthly goals. These should reveal where you
would like to be financially by a certain time in the near future.
Long-term
goals include the amount of wealth you would like to accumulate
within a year, two years, or maybe even five or ten years. Both types
of goals are necessary to build wealth. Without goals, you are
wondering blindly with no care or thought of what's ahead. This
pattern of life is sure to leave you empty-handed!
Step
2: Create a Business Plan
Every
successful business from the past and today started with a plan. Your
business plan should illustrate where you are now, where you plan to
be in the future, and how you're going to get there. Write these few
notes down on paper. Then, fill in the blanks to create a rough
business plan. It's easier than you think.
*Your
current income
*Business
profits and expenses (if you already own a business)
*Business
budget (or personal budget if working for someone else)
*Capital
needed upfront to promote and operate business
*Plans
to acquire the capital needed (source of capital)
*Spending
plan (promotions, supplies, inventory, online expenses, etc.)
*Expectations
(What results do you expect from your initial efforts?)
Creating
a business plan is a necessary step to build wealth through your own
business. Even if you don't own a business, you should write down a
similar plan to reach your personal wealth goals.
Step
3: Avoid Harmful Debt
Debt
is the one of the key reasons many people never accumulate wealth.
But remember, there are two types of debt: harmful debt and necessary
debt. Harmful debt is the debt you create for things you do not need
such as excessive shopping, luxury items, expensive cars that you
can't afford, etc. Necessary debt is a debt most people must have to
live, such as a mortgage, car loan (affordable), medical, college,
etc. These debts are a part of life for most families and will be for
many, many years. However, even these types of debts should be kept
well within your income limitations. If you can only afford a
$250/month car loan, then shop around until you find one at this
price. Don't give in to the temptations and pressures to buy the
fancier, more expensive car with a $450/month payment. It's not worth
the risk!
You
may ask, "I thought these steps were for building wealth?"
As
it happens, debt is the opposite of wealth. The more debt you have,
the less wealth you will accumulate. You can't save money or invest
money that belongs to someone else. If you earn $3,000 in income this
month, but owe $2,000 in loans (before everyday living expenses), you
can't possibly have extra money to save. You must either earn more or
sell some items to pay off your debt. You should avoid this "debt
trap" if you intend on building wealth for the future.
Another
type of debt is one for your business. You may take out a small
business loan to get things started or to promote your business. If
you are uncertain about whether the business will bring profits, try
to avoid business debt until you have tested it a while.
Step
4: Develop a Personal Plan
Above,
you developed a business plan. Now it's time to create a personal
plan. What tasks will you do daily to build wealth? Put yourself on a
schedule and a strict budget. Work toward your goals daily by making
a list of things to do and marking off each item on the list as you
complete the tasks. In your budgeting, include a set amount of money
you will put away in savings (savings account, IRA, stocks, bonds,
etc.) If you plan to invest, be sure to diversify your investments.
Choose only one or two high-risk investments and several "safer"
investments such as mutual funds or bonds.
Step
5: Stay focused on the Goal, not the Circumstances
No
matter what circumstances you find yourself in, keep your eyes on the
wealth-building goal ahead. Even if sales are down in your business,
don't stop dead in your tracks. Remember, businesses have ups and
downs. If you remain steadfast toward your goal during the slow
times, the busy times are bound to be much better than ever. Your
income will grow and you will have the extra money needed to reach
your wealth-building goals.
In
a nutshell, building wealth does not happen over night with one
get-rich-quick program. It happens with consistent labor toward the
goals and tasks you have created. You can build wealth for your
future if you do not waver from these basic truths that have worked
for millions of others!
Credit:
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