In last weeks post, I mentioned how I came across Todd Tresidder’s excellent wealth-building and financial advice website whiel searching for an ‘all-singing-dancing-retirement-wealth-calculator’. I found ‘The Ultimate Retirement Calculator’ and plenty of other great resources on Todd’s site, financialmentor.com, so contacted him to see if he would mind me placing some of his content here on Get FIRE’d asap. He agreed and so I bring you part 2 of his article “The 10 Commandments of Wealth Building”. If you missed part 1, you can find it here.
One thing I did forget to mention in last week’s post was that I’m not being paid or rewarded for this. I just thought it was such a great article it was worth sharing and if you find yourself over at Todd’s website, I’m sure you’ll get some benefit from his various calculators and other resources.
6th Wealth Building Principle: Avoid Conspicuous Consumption
The illusory carrot for building wealth is the attraction of a “more, better, different” lifestyle.
This myth is perpetuated by brokerage ads filled with sailboats, European vacations, and perfectly manicured golf resorts. The problem is consumerism causes your limited resources to be directed toward lifestyle and away from building wealth.
They are competing demands for the same scarce resources – and only one can win the battle.
“Seek freedom and become captive of your desires, seek discipline and find your liberty.”– Frank Herbert
The reality is wealth is a form of delayed gratification. Wealth builders live modestly by spending less than they can afford (in money, time, and energy), so they can invest the difference for greater value in the future.
They understand happiness doesn’t result from the material trappings of wealth, because that would only keep them from fulfilling the deeper cause that drives them to success.
The only way to embrace delayed gratification as the most fulfilling alternative without any sense of sacrifice is to have a motivating cause deeper than your desire for lifestyle. If lifestyle is your cause, then consumption becomes the priority — making wealth eternally elusive.
7th Wealth Building Principle: Build Supportive Environments
If building wealth was easy, then more people would achieve it. Yet, few succeed in their pursuit of financial freedom even though anyone can put together a reasonable plan to become wealthy.
The difference is consistent, persistent, focused action. Life provides an endless stream of distractions to sidetrack your plans for wealth.
The solution is to create a support system that keeps you focused, on track, and literally draws you toward wealth.
Your family environment, relationships, work environment, financial habits, daily rituals, and more must be proactively designed to literally pull you toward wealth by supporting and reinforcing your plans.
You must structure your life to support a wealthy outcome. It’s the path of least resistance.
Financial Mentor’s coaching and educational products can help you re-design your life to achieve financial freedom. You can either direct your daily life to achieve your goals, or you can passively allow your days to be filled with alternatives.
You either get the results you choose, or you get the results that are given to you. Which path will you follow?
8th Wealth Building Principle: Apply Leverage To Build Wealth
Leverage is the essential success principle that builds wealth. You won’t get wealthy by trading time for money, and you can’t do it all yourself.
Building wealth requires you to work smarter rather than harder by applying the following principles of leverage:
- Financial Leverage: Other people’s money so that you’re not limited by your own pocketbook.
- Time Leverage: Other people’s time so that you’re not limited to 24 hours in a day.
- Systems and Technology Leverage: Other people’s systems and technology so that you can get more done with less effort.
- Marketing Leverage: Other people’s magazines, newsletters, radio shows, and databases so that you can communicate to millions with no more effort than is required to communicate one-on-one.
- Network Leverage: Other people’s resources and connections so that you can expand beyond your own.
- Knowledge Leverage: Other people’s talents, expertise, and experience so that you can utilize greater knowledge than you will ever possess.
Leverage allows you to build more wealth than you could ever achieve alone by utilizing resources that extend beyond your own. It allows you to grow wealth without being restricted by your personal limitations.
Leverage is the principle that separates those who successfully attain wealth from those who don’t. It’s just that simple.
If you aren’t using leverage, then you’re working harder than you should to earn less than you deserve — and that isn’t going to make you wealthy.
9th Wealth Building Principle: Treat Your Wealth Like A Business (Because It Is)
You wouldn’t build a business without a business plan. Why should building wealth be any different?
Design your wealth plan based on proven business principles that lead to success. These principles include competitive advantage, leverage, accurate record keeping, and accountability– just to name a few.
Run your money like a business, because that’s exactly what it is: a personal financial management business.
Additionally, your personalized wealth building plan should take into account your unique skills, interests, and resources while incorporating the Ten Commandments to Wealth, successful investment principles, and much more.
When complete, your wealth plan will be tailor-fitted to your unique life situation, while honoring the proven success principles that no wealth plan is complete without.
Run your money like the business it is. Anything less will slow your journey to wealth.
10th Wealth Building Principle: Steward Your Wealth
“If a man is proud of his wealth, he should not be praised until it is known how he employs it.”– Socrates
Wealth is your servant, and you are a servant to your wealth. Money is little more than a tool that comes with a responsibility to use it wisely.
The rich man is a fool who dies without arranging his affairs to assure that his wealth does good during his lifetime and after his passing.
Through your legacy of wealth, you have the opportunity to bless yourself and your family’s life now and in the future. And you can go beyond that by expanding the circle to include the lives of all who follow you.
As a successful wealth builder, you’ll be in the unique position to organize charities that can do great social good. The fact that you can’t take it with you means wealth is a gift to be given.
Always understand that wealth isn’t something you possess, but a flow which has found a temporary parking place under your stewardship.
Eventually this stewardship will move to others as all things must pass (including you). The wealth builder’s solemn responsibility is to use this temporarily gifted power wisely so that it creates maximum benefit for all those who are touched by what you created in your lifetime.
There are ten key wealth building principles that lead to true wealth, not just monetary wealth. The objective is not just to become rich, but to build a balanced, fulfilling, wealthy life.
These ten key principles will help keep you on track:
- Build Wealth For A Deep Cause: Money alone is too shallow a goal to motivate you to overcome all the obstacles that stand between you and wealth. When you find a deeper goal like freedom, growth, creativity, or charity, then you’ll have the internal motivation to persist and succeed.
- Give More Value Than You Take: When you give value then your financial success becomes a measure of how much you have given to the world. It’s a satisfying way to live.
- Live with 100% Integrity: Integrity is non-negotiable because no amount of money can replace a good night’s sleep, a clear conscience, and a peaceful mind.
- Be Courageous: Wealth results from doing what others won’t so you can have what others never will.
- Be Disciplined: Life will conspire to distract you from achieving your goal. Only the disciplined will stay the course with consistent enough action to get results.
- Avoid Conspicuous Consumption: Nobody ever spent their way to financial freedom. Every day you make a choice between consumption today or wealth for tomorrow.
- Build Supportive Environments: The path of least resistance to wealth is paved by supportive environments that literally pull you toward the goal.
- Apply Leverage: Leverage is what separates those who achieve wealth from those who don’t. You can’t reach the goal by trading time for money, and you can’t do it all yourself. You need leverage.
- Treat Your Wealth Like A Business: As a wealth builder, you’re in the personal financial management business and must manage your net worth just like an executive manages a successful business.
- Steward Your Wealth: Money is little more than a tool that comes with the responsibility to use it wisely. It’s not something you possess, but something that passes through you and must be given back.
After all, isn’t life too short to settle for anything less?
“Say what you will about the Ten Commandments, you must always come back to the pleasant fact that there are only ten of them.”– H.L. Mencken