I often hear people confess wealth as a wish but in my journey in life, I have not seen any of those wishes come to pass. So, I ask “why do they not have their wishes met?” it’s simple; nothing of value comes cheap! This further goes to show that it requires carefully following of principles to arrive at the desired results.
Wealth creation is a proven scientific process that results in financial independence. In this year 2017, I will like to introduce the seven steps that will actually launch any individual into his financial superfiuous.
Building wealth is a puzzle! It’s a complicated and sometimes overwhelming puzzle to many people, which explains why few ever achieve this financial freedom. Getting all of these seven steps right, and in strategic order, can bring one financial success. However, get just a few pieces wrong and it can cause the whole house of cards to tumble down.
Taking into cognizance these steps, let’s see how they work…
Each of these steps is a stand-alone module designed to solve a specific problem in the wealth building journey and produces a specific outcome. The entire 7 Steps provides one big transformation – financial independence – that is broken down into multiple smaller transformations that must occur to reach the goal. The only difference between interested persons is which step they pick as their starting point based on where they are in their wealth building journey. That will tell which specific solution is the appropriate next step to take. But I encourage each step is adhered to in order to make the desired progress.
Steps 1-2: Personal & Financial foundation for wealth
Every building starts with clearing the land and laying the foundation. That’s because the depth and strength of your foundation is the limiting factor for the height of your structure. The same is true with wealth building. Everyone’s financial freedom is limited by the depth and strength of the personal and financial foundation and as such Step 1 is the financial half of the foundation and Step 2 is the personal half.
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Step 1: Financial Foundation
Basic Financial Planning: Basic financial planning forms the essential financial foundation to wealth building and is the first step in constructing financial freedom. Step 1 answers the question, “How do I get my financial house in order so that financial freedom is even a practical possibility?”
It includes all the basics like:
» How to create a savings plan you can stick with.
» The proper use of insurance and how to avoid rip-offs.
» How to become completely debt free (including no mortgage) in 5-8 years.
» How to optimize every buying decision
using the “No-Budget” budget.
» The foundational principles of good tax planning.
» The proper use of credit.
» Beginner investing.
» Beginning risk management (because the unexpected should be expected).
The goal of this step is to take back control of personal finances to have a deep and solid foundation to build the financial freedom on top of.
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Step 2: 33 Habitudes of the Wealthy
This Step is the personal side of wealth building foundation. The reality is everyone spends nearly all the waking hours earning money, managing money, spending money, or consuming what has been purchased with money.
Personal habitudes (habits + attitudes) determine how well to make those 100’s of decisions every day. It works just like those compound return charts showing how saving a dollar a day at
X percent will make a millionaire in Y years. The principle is that small changes compounded over long periods, produces extraordinary results, and it is 100% true. Now, just imagine what is possible if that principle is put to work on the 100’s of small decisions made every day. What is realized is Habitudes are the absolute easiest way to achieve any personal or financial goal desired, including financial freedom.
This Step is admittedly straightforward to understand, but don’t underestimate its power. This is literally how to take financial freedom goal from a question of “ if” to the certainty of “when”. Best of all, it requires no extra effort, money, or time, because all gains come through improved efficiency.
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Step 3 – 4: How to Create Wealth – Plan & Action
Step 3 shows how to design personalized plan to create wealth, and Step 4 shows how to take massive action on that plan with enough persistence to actually produce wealth.
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Step 3: Financial Foundation, Design Personalized Wealth Plan
Step 3 is the blueprint for creating wealth. It serves the exact same function as the blueprints of a building that shows the carpenter how all the pieces efficiently fit together to form the house. Just imagine trying to build a house without a plan? It would be wasteful, inefficient, and the end result would come out poorly. Isn’t that exactly how most people approach wealth building?
In Step 3 one designs personalized plan to grow wealth using the building materials of unique skills, resources, and interests, and then nailing them all together with proven wealth building principles that work. Wealth plan answers the question, “How will I get from where I am now to where I want to be in the future?” Wealth plan integrates all three asset categories – business/career, real estate, and paper assets – with all three phases of the financial freedom process – wealth creation, wealth translation, and wealth growth – to create a comprehensive plan that converts wealth from a dream into something that is actionable and feels totally real. The wrong plan will virtually guarantee failure, and no plan will produce random results. It’s got to be the right plan – the personal plan for wealth.
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Step 4: How to Take Massive Action to Achieve Financial Freedom Goals
Once the blueprint for wealth from Step 3 is in place, it’s time to start cutting wood and pounding nails to frame the house. In short, it’s time to take action – lots of it. Just as a house is not built in a day, neither is wealth. It’s a marathon – not a sprint – so taking massive and persistent action is what separates winners from wannabes.
There are three obstacles to clear to take massive and persistent action:
» One must commit to the goal (but not like one thinks, it’s a very specific type of commitment)
» One must overcome the limiting beliefs (for most people, this is way more important to realize).
» One must structure the environments to literally pull towards the goal (few people put this principle to work for them).
One can think of these three principles as a three legged stool where all three legs are required to stand strong. If any one leg is broken or wobbly, the entire stool will collapse. All three is needed or won’t make enough progress to succeed. What is discovered in overcoming these three obstacles is an entirely different technology for goal achievement that reduces waste, needless friction, and inefficiency so that goals are reached faster and with less effort. Either develop these three skills routinely to get around the obstacles that stand between you and your financial freedom goals, or get derailed and fail. It’s how to take the wealth plan from Step 3 and convert it into results. It’s just that simple.
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Step 5 – 6: Invest Smart to Grow Your Wealth
Now we finally get to the more important part of financial freedom – investing your wealth. Step 5 covers advanced paper asset investing (stocks, bonds, mutual funds) and step 6 provides a collection of advanced investment topics. Combined, these two steps provide you with knowledge essential to grow your wealth in excess of inftation for long-term financial security.
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Step 5: Expectancy Investing – A Scientific Investment Strategy That Makes More By Risking Less
Traditional low cost, passive index, asset allocation is a smart starting point for paper asset investing. When new to investing then this is the correct place to start, and it is all taught in Step 1. It is very simple to learn and well proven. When ready to take investing to the next level and build on the shoulders of this fundamentally sound strategy, then Step 5 is the solution. One will discover how to apply the principles of expectancy and risk management to make more by risking less. The truth is mathematical expectancy determines the profits in the portfolio. It shows how to reliably grow assets faster than inftation destroys them, while sleeping peacefully at night.
This is the multiplier step – do it right and all the efforts are magnified through compounding: do it wrong and all your efforts are wasted.
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Step 6: Alternative Investment Strategies
This teaches investment strategies that are usually of interest to people after they achieve wealth and want an added level of security and confidence. It is about subtleties and refinements, not essentials.
» For example, when the investment objective changes from maximum growth to inftation adjusting income that can never outlive, what is the best way to achieve that objective?
» To want increased security by diversifying the asset base outside of traditional paper assets and/or the domestic currency, what are the best strategies?
» How to transfer longevity risk, currency risk, and investment risk to a counter- party?
These are questions that become compelling as financial freedom approaches, but aren’t essential to creating wealth in the first place.
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Step 7: How to Live True Wealth and Personal Freedom
This is about your life. It’s the capstone to the entire wealth building puzzle. Because here’s the funny thing about wealth… nobody really wants more money. Step 7 answers the question, “So now that you’re a millionaire, so what?”
Before financial freedom there always was a laundry list of reasons that made one unhappy: the boss is a jerk, can’t afford something, not enough time, or some other reason. Once you achieve financial freedom all those excuses are stripped away. You quickly realize the goal was never monetary anyway. That’s why so many retirees fall into depression or return to work after the 6-15 month retirement; honeymoon is over. They climb the ladder to success only to realize it was leaning against the wrong wall. There is more to personal freedom, fulfillment, and happiness than is superficially obvious. It’s not about living the “pro-leisure circuit” lifestyle. It shows you how to enjoy the wealth you built in Steps 1-6 by putting a capstone on financial freedom that turns it into personal freedom and a fulfilling life.
