5. Consider Becoming an Owner of Things You Understand as a First Step to Building Wealth
One of the big intellectual and emotional hangups people seem to have when they aren’t exposed to wealth or wealthy families is making the connection between productive assets and their every day life. They don’t understand, on a visceral level, that if they own shares of a company such as Diageo, every time someone takes a drink of Johnnie Walker or Captain Morgan, a portion of that money is making its way back to the corporate coffers for ultimate distribution to them in the form of a dividend. They don’t truly understand that if they stand outside the gates at Disneyland and watch people walk into the park, if they own The Walt Disney Company, they enjoy their share of any profits generated from those guests.
Rich men and women have a habit of using a disproportionate percentage of their income to acquire productive assets that cause their friends, family members, colleagues, and fellow citizens to constantly shovel money into their pockets. Consider, as you read this, that you’ve probably never met me. Yet, if you’ve ever eaten a Hershey’s bar or a Reese’s peanut butter cup, you’ve indirectly sent me real cash. If you’ve ever taken a sip of a Coca-Cola or eaten a Big Mac, you’ve indirectly sent me real cash. If you’ve ever taken out a student loan or borrowed money to buy a house from a bank like Wells Fargo, you’ve indirectly sent me real cash. If you’ve ever ordered a cup of coffee at Starbucks, you’ve indirectly sent me real cash. If you’ve ever purchased Colgate toothpaste or used Listerine mouth wash, swiped a Visa or MasterCard or filled up your car with gasoline from an Exxon Mobil station, you’ve indirectly sent me real cash. I wasn’t gifted those ownership stakes. I didn’t inherit those ownership stakes. I started with nothing and made a decision that my highest, and first, financial priority was to acquire ownership of productive assets early in life. It was a matter of priorities. By respecting every dollar that flowed through my hands, and making a conscious, informed decision about how I wanted to put it to work, the miracle of compounding did the heavy lifting.
When you understand this, you understand that, in societies such as the United States where the trend for several centuries has been lower and lower rates of millionaires and billionaires being made up of first-generation, self-made rich, building wealth is often the by-product of behavioral patterns that are conducive to building wealth. It’s basic mathematics. Replicate the behavior and net worth tends to accumulate.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
#6: Study and Admire Success and Those Who Have Achieved It… Then Emulate It
A very wise investor once said to pick the traits you admire and dislike the most about your heroes, then do everything in your power to develop the traits you like and reject the ones you don’t. Mold yourself into who you want to become. You’ll find that by investing in yourself first, money will begin to flow into your life.
Success and wealth beget success and wealth. You have to purchase your way into that cycle, and you do so by building your army one soldier at a time and putting your money to work for you.
#7: Realize that More Money is Not the Answer
More money is not going to solve your problem. Money is a magnifying glass; it will accelerate and bring to light your true habits. If you are not capable of handling a job paying $18,000 a year, the worst possible thing that could happen to you is for you to earn six figures. It would destroy you. I have met too many people earning $100,000 a year who are living from paycheck to paycheck and don’t understand why it is happening. The problem isn’t the size of their checkbook, it is the way in which they were taught to use money.
#8: Unless Your Parents Were Wealthy, Don’t Do What They Did
The definition of insanity is doing the same thing over and over again and expecting a different result.
If your parents were not living the life you want to live then don’t do what they did! You must break away from the mentality of past generations if you want to have a different lifestyle than they had.
To achieve the financial freedom and success that your family may or may not have had, you have to do two things.
First, make a firm commitment to get out of debt. To find out which debts should be paid off before you invest and those that are acceptable, read Pay Off Your Debt or Invest?. Second, make saving and investing the highest financial priority in your life; one technique is to pay yourself first.
Purchasing equity is vital to your financial success as an individual whether you are in need of cash income or desire long-term appreciation in stock value. Nowhere else can your money do as much for you as when you use it to invest in a business that has wonderful long-term prospects.
#9: Don’t Worry
The miracle of life is that it doesn’t matter so much where you are, it matters where you are going. Once you have made the choice to take control back of your life by building up your net worth, don’t give a second thought to the “what ifs”. Every moment that goes by, you are growing closer and closer to your ultimate goal – control and freedom.
Every dollar that passes through your hands is a seed to your financial future. Rest assured, if you are diligent and responsible, financial prosperity is an inevitability. The day will come when you make your last payment on your car, your house, or whatever else it is you owe.
Until then, enjoy the process.
Article from: https://www.thebalance.com