Millionaire Mind

The First 4 Steps to Wealth Creation Made Easy

Wealth Creation Secrets

What if we told you that wealth creation takes as little as four steps?

That’s right, learning how to harness and invest your wealth is that simple. And yet, over half of Americans avoid the stock market altogether.

Why is that? We have a hunch that most people don’t know where to start.

That’s why we’re here to get the basics down and show you the first four steps to wealth creation.

Set Effective Goals

It’s easy to sit around daydreaming about wealth. It takes a lot more effort to make a plan.

But that’s what it comes down to in a surprising amount of cases.

Would you hope to complete a journey without knowing the route? Of course not, and the same applies here.

Setting effective goals distills into a few simple rules:

Write your goals down

Psychology tells us that there’s a tangible benefit to writing things down. You’re more likely to remember something you’ve written down, even if you never consult it again.

The same is true for goals.

Writing down a goal cements it in your mind, both consciously and subconsciously. Writing down goals also lets you revisit them to reassess.

But writing down goals isn’t the same as setting them in stone. It’s expected that you will revise and amend your goals depending on your situation. The key is to have specific, targetable goals so you can measure your progress.

Share your goals

You’re more likely to keep to a diet or exercise program if you tell someone about it. Motivation and inspiration are weak forces, psychologically speaking, whereas social pressure and expectation are a lot more driving. You can do the same for your wealth creation goals.

Be SMART

SMART is an acronym commonly used in project management and target setting. Let’s break down how to be SMART.

  • Specific – Vague goals are daydreams. They won’t help you take steps forward.
  • Measurable – You need a way of tracking your progress. The obvious measurements, in this case, are earnings and savings targets.
  • Agreed upon – Agreed firstly with yourself, and then with your partner and anyone else you’re working with on your road to wealth.
  • Realistic – Keep your feet firmly planted when you write your goals. Trying to aim too high at the outset will only lead to frustration.
  • Time-based – To effectively track goals, you need to set time frames. This provides the pressure of a deadline to keep you on target.

SMART goals are the difference between ‘Be a millionaire‘ and ‘By year end, I will accrue $10,000 in savings’.

Wealth Creation

It may seem tautological to include wealth creation as a step to creating wealth, but without generating the money, you can’t have it. It’s that obvious.

You can only ever save so much money if you aren’t making enough of it in the first place.

This step ultimately boils down to two elements:

  • Does your work pay well?
  • Do you enjoy it enough to stick at it?

If you can satisfy both of those conditions, then you can keep at it as long as you need to earn your way to financial independence.

If you answered no to either of those questions, you may need to have a rethink. Yes, that may mean changing jobs.

But if you’re not wealthy, then wealth isn’t going to come from doing what you’ve always done.

When you have a job you enjoy, you’re more likely to excel at it and push yourself further, whether that’s working longer hours or seeking out a promotion.

If you’re not happy with your state of employment, now may be the time to look at retraining.

To build wealth, you need to become comfortable with the idea of investing.

Training is an investment in yourself, from which you can reap rewards in years to come.

Now is also a good time to talk about “passive income”. As opposed to the active income from working your job, passive income earns money even when you’re not thinking about it.

Passive income takes many forms. Rental fees, royalties from intellectual property, profit from print-on-demand services, and interest are all examples of passive income.

Passive income is fantastic for wealth creation. After the initial outlay of time and money (such as purchasing a property), the money then keeps rolling in. You continue to make money without investing more time, in turn allowing you to use that free time to create more money.

Wealth Retention

Most people aren’t good at saving.

It’s a brutal truth, but there it is. Assuming they clear a certain earnings bar, the largest gap between someone with money and someone without is down to saving.

It’s blindingly obvious, but also runs counter to our own instincts for wanting new and better things. You need to take the opposite approach. Your wealth is your hoard and you need to be the dragon!

As with goals, saving often comes down to making ideas concrete.

You may have an idea of how much you spend, for instance, without knowing specifics. Here’s a revelation: you’re spending more than you think.

Start tracking your spending. Record it on a spreadsheet or software suitable for the purpose. Look at what you’re actually spending. You’re likely to shock yourself.

However, recording your spending in this way has another advantage: you can cut it down.

Getting an overview of your savings will show you where you can cut costs. Old subscriptions, unnecessary luxuries, eating out where you could pack a lunch; the list goes on. You need to let yourself splash out a little, but keep treats as treats.

Another key to wealth retention, and therefore wealth creation, is staying out of debt. Interest fees will leech you dry if you let them. Even if it’s only a few hundred on a credit card, be sure to pay it off every month.

Investing and Owning

This is the big final step. You can think of this as what you’ve been accumulating for.

To take the leap from simply having money to being wealthy, you need to do one of two things, if not both:

  • Invest
  • Own

Investing is how you get your money to grow exponentially, the key to wealth creation.

Even with aggressive saving, there’s a hard ceiling on how much money you can make. Investing will take you past that ceiling.

Investing sensibly is tough, but be aware you’ll need to take on certain risks to really reap rewards. Investing in assets that accumulate over time will carry your money toward wealth.

Owning may prove safer than investment, but is often more expensive at the outlay. Owning property or a business can result in fantastic yields from rent and profits.

Remember that passive income we discussed earlier?

Well, investing, whether it’s in real estate, stocks, bonds, or other assets, is the big-league version. Investing is the end-goal here, the real difference between millionaires and everyone else.

With these tips in mind, you can start working today toward being wealthy. There’s nothing stopping you setting your goals down right now!

Leave us a comment below if you want to share tips or get some further advice.

We’d love to hear how you’re doing!

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