Is accumulating wealth as easy as following a 3-step plan? Yes it is and no it isn't. As with many things in life, accomplishing a goal such as accumulating one million dollars (or even $100,000) depends on your desire, your personal choices and your daily actions. Let's start with one example on how you might miss this goal. One of
first components of successfully meeting any goal is to have desire (or a compelling reason). You've probably thought about losing weight, running a marathon or accumulating a great deal of wealth. However, 'want', 'wish', 'dream' or 'thought' is often not enough to propel you to take continuing action steps to successfully attain your goals. Even if you take first action step, your ability to sustain enough motivation to meet your goal may soon disappear after a few months or possibly after a few days. Until you create and internalize a 'compelling reason' (true desire) to meet a specific goal, it will be difficult to meet your goal. You have to make this desire a 'must-have' instead of just a 'want'; you need a compelling reason to meet your goal. You need to create a true desire.
The simple part of accumulating wealth is many people have already succeeded in meeting their wealth accumulation goals. I have personally accomplished my net worth goals on two separate occasions and in 3 years I expect to reach my next net worth goal. I started with a net worth of a negative $10,000, mostly consisting of personal credit card debt. Meeting my net worth goal wasn't easy; but I created a compelling reason, made some personal financial choices & took specific, daily actions to make these goals. Many other people from all walks of life, with all types of educational backgrounds are also very successful in meeting their net worth goals. Since it has been done many times before, setting and making your own personal wealth accumulation goal can be very attainable.
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Let's say you determined that accumulating a $100,000 net worth is one of your personal goals. If you've created a compelling reason (a true desire), then you're ready to proceed forward to accumulating $100,000 and probably, much more. If you've not made it a 'must' goal and you are still only dreaming about accumulating $100,000, then you're not ready to start. You're not ready to take second action step. This first step is critical - you must have a "compelling reason" to make your goal.
Anthony Robbins has made a living by proving that success starts with a strong desire. Check out a product review of his latest - Get Edge program.
Ok, let's say you have now created your own personal compelling reason to attain your goal. You're ready to get started with second action step. What are key elements in meeting your wealth-accumulating goal?
1. Your income must exceed your expenses 2. You will invest your excess funds 3. You will be patient and let magic of compounding work
1. Your income must exceed your expenses: This is a simple mathematical statement. However for many people, this is most difficult step to overcome on a consistent basis. It is all about your choices. If your income does not exceed your expenses, you have to make a choice. You will need to cut your expenses, increase your income or if you are really ambitious and have that 'compelling reason' to accumulate wealth, you'll choose to do both. In my personal situation, I focused about 70% of my energy on cutting expenses & 30% on increasing my income. I decided to spend less on clothing, entertainment, dining out and I also cut coupons to help reduce grocery bills. I decided to live within my personal financial situation. I decided to spend less than I earned. Remember, you have a choice. A. Do you have a compelling reason & discipline to accumulate wealth? OR B. Do you lack discipline and have an immediate gratification need so strong that to satisfy your need, you need to purchase newest fashion, go to all home football games, dine out 4 nights a week, etc? It's all about choice.
2. The second step to accumulating wealth is to invest your excess funds. You need to invest your excess funds to meet your personal financial goals. Investments can range from real estate, stocks & bonds, CDs or possibly investing in a small business. Whichever route you choose, create a systematic approach to investing, change direction if necessary, but don't stop. Investment diversification is important to help ensure that you can ride through normal up-and-down cycles of stock market or real estate market. Personally, I started with investing in a 401K, then stocks and bonds and eventually real estate. While other young people decided to spend all their weekly paycheck, I made a choice to first, put a few dollars away each week into a 401K and other investment vehicles. I 'paid myself' first and then I spent money on other entertainment activities. See some of investing books at end of this article.
