Sometimes I think I take for granted that I’m in the investment game. If you’re not in the business of portfolios and passive income, the guiding principles of building wealth and strategic money management might be as foreign to you as another language.
One of the best things you can do for your financial future is to learn and begin to value solid wealth management skills as early as possible. This is what sets apart the people who already have a year’s worth of pay in their savings by 30 and the people who think it’s a totally unattainable goal. (Did you miss that internet debate?)
Good money management skills and real wealth aren’t beyond your reach. It just takes educating yourself and putting into practice the good and often simple principles that you learn. Here are the top things that I believe every person needs to know to build a solid foundation for real long-term wealth.
5 Essential Principles for Building Long-term Wealth
1) Create multiple streams of income.
Hear me on this: one of the most important things for building your wealth in the long term is creating multiple streams of income. That means you can’t rely on your one job to bring home all the bacon. You can’t rely on your spouse’s job. You need to have passive cash flow. It can come from investing in turnkey real estate (my recommendation), it can come from another investment or even a side hustle. Wherever you can, you want multiple streams of cash flow not only so you can bring more money in every month (increasing your wealth) but so you’re minimizing your risk. If you lose one source of income, you’re not left with no income.
Multiple streams of cash flow, especially through investing, is the key to building wealth.
2) Focus on specific solutions, not problems.
Wealthy people are all about solutions. They want to innovate, solve, and troubleshoot. Building wealth is about specific solutions and strategies, not fixating on the obstacles or setbacks preventing them from reaching those goals. For you, that means making actionable plans and defining the solutions that will help you move forward and push your net worth to the next level.
3) Make your money work.
A mistake that many Americans make is believing that having money in the bank is the same as being wealthy. Having savings is not the same as having wealth. You must make your money work in some way if you want to achieve wealth. Whether you invest in something low risk like bonds or stocks to some degree, or pursue investment in real estate, with a business, or start a venture of your own, it is essential to make your money work.
4) Believe that your wealth and your future is in your control.
In many ways, wealth is a matter of mindset. You have to believe that you are able to become wealthy and that you are in charge of your financial future. The economy doesn’t hold sway over you, other people don’t hold sway over you, and your money is not your boss. You are the boss. You know where you want to be and you are going to get there. Your resolve is paramount.
Wealthy people are not controlled by their money or by the things their money can buy. They know what they want and have made up their minds that they’re going to get it.
5) Find your focus.
Lastly, you have to find a focus. If you’re like me, you probably have a lot of different interests, goals, and things you could focus on all at once. This can become totally overwhelming, especially if you are just starting out.
What you have to do is focus on one financial goal at a time and really strive for that. Maybe you want to save up for a big investment but you also want to be debt-free. Playing divide-and-conquer will only take you twice as long to accomplish either goal.
Instead, focus! Make a targeted effort to accomplish large financial goals at a time. This will prevent you from becoming stressed, overwhelmed, or sidetracked. You will feel more progress when you accomplish one major goal than in chipping away at several very slowly.
Money management can be daunting for the inexperienced. However, it doesn't have to be difficult. Small, consistent efforts combined with resolve and discipline make all of the difference in the world for your financial future.