Thereare so many things involved with building wealth that it would take much morethan one article to explain it all. So, I have put together a simple five-stepguide to help you get a great start in building wealth for a lifetime.
Step1: Set Specific Goals
Goalsetting is a task that can be easily put off – especially when you areextremely busy in day-to-day activities. However, goal setting is the first andone of the most important steps you’ll take to achieve wealth. Set bothshort-term and long-term goals. Short-term goals may be daily, weekly andmonthly goals. These should reveal where you would like to be financially by acertain time in the near future.
Long-termgoals 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 necessaryto build wealth. Without goals, you are wondering blindly with no care orthought of what’s ahead. This pattern of life is sure to leave youempty-handed!
Step2: Create a Business Plan
Everysuccessful business from the past and today started with a plan. Your businessplan 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.
*Businessprofits and expenses (if you already own a business)
*Businessbudget (or personal budget if working for someone else)
*Capitalneeded upfront to promote and operate business
*Plansto acquire the capital needed (source of capital)
*Spendingplan (promotions, supplies, inventory, online expenses, etc.)
*Expectations(What results do you expect from your initial efforts?)
Creatinga 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 reachyour personal wealth goals.
Step3: Avoid Harmful Debt
Debtis the one of the key reasons many people never accumulate wealth. Butremember, there are two types of debt: harmful debt and necessary debt. Harmfuldebt is the debt you create for things you do not need such as excessiveshopping, luxury items, expensive cars that you can’t afford, etc. Necessarydebt 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 mostfamilies and will be for many, many years. However, even these types of debtsshould 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’tgive in to the temptations and pressures to buy the fancier, more expensive carwith a $450/month payment. It’s not worth the risk!
Youmay ask, “I thought these steps were for building wealth?”
Asit happens, debt is the opposite of wealth. The more debt you have, the less wealth you will accumulate. You can’tsave money or invest money that belongs to someone else. If you earn $3,000 inincome 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 sellsome items to pay off your debt. You should avoid this “debt trap” ifyou intend on building wealth for the future.
Anothertype of debt is one for your business. You may take out a small business loanto get things started or to promote your business. If you are uncertain aboutwhether the business will bring profits, try to avoid business debt until youhave tested it a while.
Step4: Develop a Personal Plan
Above,you developed a business plan. Now it’s time to create a personal plan. Whattasks will you do daily to build wealth? Put yourself on a schedule and astrict budget. Work toward your goals daily by making a list of things to doand marking off each item on the list as you complete the tasks. In yourbudgeting, include a set amount of money you will put away in savings (savingsaccount, IRA, stocks, bonds, etc.) If you plan to invest, be sure to diversifyyour investments. Choose only one or two high-risk investments and several”safer” investments such as mutual funds or bonds.
Step5: Stay focused on the Goal, not the Circumstances.
Nomatter what circumstances you find yourself in, keep your eyes on thewealth-building goal ahead. Even if sales are down in your business, don’t stopdead in your tracks. Remember, businesses have ups and downs. If you remainsteadfast toward your goal during the slow times, the busy times are bound tobe much better than ever. Your income will grow and you will have the extramoney needed to reach your wealth-building goals.
Ina nutshell, building wealth does not happen over night with one get-rich-quickprogram. It happens with consistent labor toward the goals and tasks you havecreated. You can build wealth for your future if you do not waver from thesebasic truths that have worked for millions of others!