When most people think of “creating wealth” it conjures up grandiose mental pictures of fabulous riches and exotic celebrities. However, the term “wealth” simply refers to owning valuable assets. There is no particular reason why normal, regular people cannot create wealth using nothing more than their current income and intelligent decisions. The principal barrier to achieving this goal is a mindset many people hold that “It takes money to make money” and that they do not have enough capital to begin making money. However, there are two problems with this excuse. The first is that there has never been a time in the history of mankind where it was easier for a person of limited means to create wealth because of technology. The second is that people who discipline themselves can slowly accumulate capital reserves until they have enough saved up to begin making money.
Let’s begin with the first notion that there has never been a better time to create wealth. Consider the fact that the internet now allows people of very modest means to acquire the same information as wealthy investment houses. This technology for information and communication allows investors to find deals, establish relationships with business partners, and manage a portfolio of business and investment interests while living somewhere different from where their business is taking place. By learning how to leverage the advantages of technology, it can allow you to build a lifetime of scalable wealth.
Now we get to the problem of not having capital for investment. It is certainly true that some people can simply draw from a trust fund to invest, but most of us need to save before we can invest. This is where normal people possess true power to influence their financial future. In the short-term, most of us do not have much influence over our income. What we earn is more or less, what we earn. However, we have tremendous influence over how much we spend. By becoming disciplined and always spending less than we earn, it will result in the perpetual building of capital for investment. It is important to note that we should spend less than we earn and not earn more than we spend. The importance of this perspective is that our earnings should rise before our spending does. Some people spend based on their expectations of future income. This is a near-certain recipe for excessive debt and financial difficulty.
The way that everyday people can create tremendous wealth is by becoming educated in the fundamentals of business and investment success, spending in a disciplined manner for the purpose of building investment capital, and then prudently investing their capital. As time goes by, the returns from your investment can be re-invested to continue driving the total value of your wealth upward on a compounding growth trajectory. Eventually, the growth and income from your business and investment interests will exceed the amount of savings you add each year from living within your means. When your wealth grows to a sufficient size, it will generate annual returns that exceed your yearly spending. This is a point that many refer to as ‘financial freedom’ since you have the ability to live from the returns on your investments and no longer need to work at a job for your livelihood. (You may still choose to work, but it will be a choice and not something that is done out of necessity)
Consider that every wealth legacy started in this fashion. At some point, there was somebody who made sacrifices to fund investments or build a business. Their successes were only possible because of the discipline to sacrifice for the sake of future benefit. In many cases, this has created a wealth legacy that benefited future generations in both their family and the world at large from the many charitable contributions that have come from wealthy families over the years.
There is a great temptation by many people to exclusively look at the symbols of wealth and not the source. Large homes, flashy cars and trendy clothes are what wealth enable you to purchase, but the fundamental basis of all wealth comes from discipline, sacrifice, intelligent decisions, and prudent investment choices. By mastering these fundamental principles, you will be able to create a legacy of wealth for yourself and for future generations. There has never been a better time to create wealth than right now, so take action today and reap the benefits tomorrow.
Source by Doug Utberg