What comes to mind when you think about the wealthy? Often, when people think about wealth, they think about the big house and luxurious things. They think of the nice cars, possibly the yacht and the jewelry. Yes, these are all things that require a lot of money to purchase; however, it is a false representation of how the majority of wealthy individuals spend their money.
William D. Danko and Thomas J. Stanley authored a book named “The Millionaire Next Door,” and it talks about seven traits that the wealthy often share. I believe that four of those traits are crucial to your journey toward financial freedom and independence.
Lets take a closer look at the four Common Traits of Wealth.
Trait #1 “Living Below Your Means”
This is very straight forward! Make more than you spend! A popular saying, “The rich get richer and the poor get poorer,” has proven to be true for many different reasons. However, one of the biggest reasons the rich get richer and the poor get poorer is because the rich care more about growing their net worth than impressing their peers, while the poor care more about impressing their peers than building their net worth. This is so important, because one of the biggest reasons people over spend is trying to impress. STOP IT!! Most of the people you are trying to impress won’t be around long enough to make a difference anyway! And the people who will stick around will be far more impressed with you becoming wealthy over time, rather than you buying a cool toy right now!
Take a moment to digest this because this simple concept can make all the difference in your financial journey. In most cases, without looking deeper into a wealthy person’s financials, you may never even know they were wealthy. The majority of millionaires today dress and drive the same clothes and cars as an average person would. They are willing to do the things others are not willing to do right now so they can live the way others cannot live later.
In a previous blog, Managing Your Finances, we talked about the five most successful methods of budgeting. Budgeting will be crucial to understanding what your “means” is, so you can be intentional about living below it.
Trait #2 “Allocate Your Time, Energy, and Money Efficiently, In Ways Conductive To Building Wealth
Achieving financial freedom and independence requires an intentional plan and consistent execution. Tenzing Norgay and Edmund Percival Hillary were the first two humans ever to climb Mt. Everest. If you were to ask them how they did it, their answer would never be, “we were just out walking one day and it just happened.” No! It took planning and execution. The same is true with your journey to financial freedom!
An invaluable practice that my father taught me is to plan your day the night before. I have always had long-term goals and short-term goals, but planning specific goals and tasks the night before has not only caused me to be ten times more productive, but it also empowers me when I wake up in the morning because I know exactly what I need to do and when.
What do you need to do this year to efficiently build wealth? How can you build wealth this month or week? What about today? The more intentionally you spend your time, energy and money, the more likely it is that you will successfully obtain the outcome you desire.
Trait #3 “Be Proficient In Targeting Market Opportunities”
The majority of millionaires saw an opportunity at some point, and were not too fearful to run full speed at it. There are constantly opportunities that come and go throughout our lives, but the people who are able to get ahead are the ones who recognize the opportunity and capitalize on it.
Steve Jobs is a perfect example of this. Steve Jobs met a young gentleman named Steve Wozniak, who came up with a way for an average person to see what the computer is thinking and communicate with it. However, when Jobs saw what Wazniak created, he saw an opportunity to change the world. Just as important, Jobs courageously pursued the opportunity and made it a reality.
Trait #4 “Choose The Right Occupation”
Figure out how much money, time and resources you need to achieve your goals and dreams, and choose a career path that will allow you to accomplish those goals and dreams. At the same time, continue to educate yourself and build skills that will allow you to get the most out of your career and ultimately achieve your goals.
If your capacity, skill set and credentials were equivalent to a ladder, and career options were equivalent to buildings, then it would be extremely important for you to lean your ladder on the right building. If your ladder is long enough to reach the top of sky scrapers, but it’s leaning against a three-story building, then you will never be able to reach your potential. Likewise, if your ladder is short, but you leaned it on a skyscraper, then you will only be able to climb as high as your ladder allows.
Make sure that the building you lean your ladder on allows you to reach your ultimate goals and dreams. Meanwhile, continue educating yourself and gaining skills so that your ladder is long enough to get you to those goals and dreams.
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