A lot of people talk about getting rich, and yet there are only a small percentage of people who actually achieve it. So what’s stopping people from becoming rich?
Well it isn’t knowledge. Thanks to the internet and libraries, there is a ton of knowledge available on how to build your wealth. Whether you’re interested in business, real estate, or the stock market, there is a ton of advice from experienced experts to guide you along the way.
No matter which route you take to build your wealth, there is one important factor that will determine your success or failure…
Your financial control
This is basically your ability to spend less than you earn, while using the difference to grow your wealth.
I have a friend who’s a financial planner, and she finds that most people are suffering from money troubles. No matter if her client’s income is $30,000 or $500,000 a year, they’ve grown their lifestyle to match their income (or exceed it).
She tells the story of a woman that was earning $10,000 a month and estimated her spending at “about $3,000 per month.” The woman suddenly got quite embarrassed when my friend inquired about the bank account that held her extra $7,000 a month she was saving. Of course there was no bank account, and she was really spending $10,000 a month.
And that’s the reality for most of us… we spend everything we earn. The question is whether we’re spending it on things that will really get us what we want in life.
There is an age old – yet often ignored – principle in personal finance called Pay Yourself First. The idea is to put at least 10% of your income away as soon as you receive it. This money goes into your financial freedom account, and you simply live off the difference as you build your wealth.
Now before you scream at the computer, “I can’t afford to put aside 10% of my income,” hear me out. There was a time when you were in college or had a low paying job and you managed to live on that income. Then, as your income has increased over the years, so has your spending.
Paying Yourself First is simply a new habit and once you get started it becomes quite natural. You’ll actually be amazed that you don’t miss the 10% at all after a while. You’ll also be amazed by how quickly your financial freedom account grows.
The amount isn’t as important as the habit you are forming. If you think 10% is a stretch then start with 1% and increase it from there. I have heard of people starting with just a few dollars a week, yet the habit they built allowed them to grow their financial freedom account significantly.
The worst thing you can do is say you’ll start building this habit when you make some extra money. If you can’t look after the amount of money you have now, then you won’t be able to look after a bigger amount later. It all starts with the habit and the money will follow.
As the amount grows, you need to be disciplined and keep it locked away in your financial freedom account. No dipping into it for emergency bills or must-have purchases. Especially don’t touch it if you believe you really need a vacation (start another account for that).
You can decide to be wealthy or you can decide to be like most people that struggle financially. Whatever you decide is fine, and it’s completely up to you.
However, if you want to be wealthy, then you need to start your financial freedom account right now. It’s the easiest and simplest way to guarantee you’ll be wealthy in your lifetime.
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