Photo by Geoff Brooks
The truth of the matter is that learning how to build is utterly simple. You noticed, I hope, that I used the word simple. There really isn’t much of a mystery as to how it works. I subscribe to the overall methodology of spending way less than what I make, investing between 30 to 50% of my income and accelerating the process by having a side hustle.
The truth of the matter is that building wealth is simple…it’s just NOT easy!
I’ve spent the better part of my entire life in and around wealth building. In the first 22 years of my career, I assisted entrepreneurs and small business owners build companies to create wealth.
Over the past 10 years, I’ve focused my career on instructing and assisting individuals with developing strategies that then take this created wealth and build wealth.
So wait a second! Isn’t creating wealth the same as building wealth? Quite frankly, they couldn’t be any more different and that IS the reason why most people who work hard and even make a fair amount of money never actually build wealth.
In my experience, I have found the creation of wealth simply as a component within the overall wealth building process. Obviously it is extremely difficult to build wealth without first being able to create it, yet creating wealth by itself with no further strategy once you’ve created it doesn’t ensure that wealth will be built.
Huh? Exactly. Let me elaborate. What I’ve seen happen so many times in my career working with entrepreneurs is that they seem to be very good at creating income from their entrepreneurial pursuit but few of them are able to build true wealth.
Creating wealth and building wealth are different
Here’s the distinction; they create an expensive lifestyle whereby they buy a lot of ‘stuff’ which requires money to constantly be made but they have difficulty in crafting a lifestyle and strategy that ensures that this created wealth then works for them to build wealth over time.
Essentially, they create a system where they are income rich but wealth building asset poor.
To truly build wealth an individual needs to accumulate assets that generate revenue that then builds wealth for that individual. More specifically, you create wealth to first buy the assets like stocks, bonds, real estate and businesses that in turn, build wealth on your behalf. Simple. But not easy.
Building wealth happens purposely and intentionally, not by accident. As such, there are systems that when put into place and actively worked will build wealth. Again this stuff is simple…just not easy. In fact, there are scores of very effective ways to build wealth.
That’s not necessarily the hard stuff. For the most part there are certain principles that when combined will build wealth, it’s the act of putting them all into motion at the same time that is the difficult stuff.
How to build wealth
How to build wealth is actually not as hard as what a lot of people in the financial services industry would like us to believe. In fact, a simple wealth building framework is all you need.
Over all the years of working in the wealth building world I’ve come to find that there are 3 very basic but critically important components that are needed in order to build wealth; (1) Money Mindset, (2) Financial Blueprint and (3) Side Hustle.
These three components form the overall structure of a wealth building system which could include a variety of known wealth building strategies and tactics.
(1) Money Mindset:
As covered in another post in great detail http://www.elitelifewarrior.com/your-money-mindset-thoughts-that-are-keeping-you-broke-part-i/ I lay out the elements that make up a positive Money Mindset. One that is positively predisposed to building wealth.
In general summary, someone who is predisposed to building wealth must understand that it’s about:
• creating value and leverage
• you can’t trade hours for dollars and build real wealth
• what you learn in your vocation (skills) that you can sell is perhaps more valuable than your actual vocation, unless it’s an extremely high paying vocation
• how you grew up with money, what stories you heard about money and what your emotions are surrounding money will determine your Money Mindset DNA
• how you see yourself with money such as being a spender, someone who is not entitled to be wealthy and how you interact with debt determines your overall relationship with money
(2) Financial Blueprint:
Having the right approach to how you build your life surrounding income and expenses will create the pathway to whether or not you will be able to build wealth. It is the central pillar of your wealth building system. I see the central principles of your Financial Blueprint as follows:
• create a positive view of leveraging your time, other people’s money (OPM) and other people’s time (OPT)
• risk versus reward profile and tolerance
• you need to invest in income generating assets and avoid all non-income generating assets (like an expensive house, furniture, cars, jewelry, etc.)
• it’s about ‘time in the market’ and not ‘timing the market’
• compound interest is one of the most important components
• creating a gap between what you earn and what you spend is required in order to build wealth
• pay yourself first
• know where your money is going
• you don’t need to beat the market, just match it and be an owner for as long as possible
• developing multiple streams of income
• creating passive income opportunities
(3) Side Hustle:
Having and controlling a ‘money machine’ is absolutely essential in order for you to build serious wealth. Being a W2 employee is extremely helpful in paying your lifestyle essentials such as your mortgage, insurances and daily expenses but for most of us, it doesn’t provide enough extra money for us to invest and build wealth. As the saying goes, your 9 to 5 will make you a living but your 5 to 9 will make you wealthy.
Therefore, it is essential to have an additional source of income that will help us build wealth above and beyond our daily expense needs. The beauty about having a side hustle is that it could be anything that you want it to be. Hopefully it will be something that you are highly passionate about, as this will be something that you will be spending a fair amount of your time on over the next 20 or so years.
The bottom line, however, is that there is a hierarchy of value regarding which side hustles to consider. For example, the highest valued side hustle is one that has the ability to have leverage in several areas that can create multiple streams of income.
A great example would be for someone who might provide personal training on the side to establish affiliate relationships with training gear and nutrition supplement companies, as well as prepared customized meal plans.
It’s all about leverage
What we are ultimately trying to do is to create a side hustle where any time we spend on the business can be amplified across different income creating platforms.
As such, leverage may in fact be the most important element to consider when assessing which activity to pursue. The goal for our side hustle is to be able to create ‘assets’ (blog posts, videos, e-books, online courses, etc.) that will continue to attract potential customers for months and years to come.
Conclusion
Regardless of the side hustle that you pursue, the importance is that you have one. This side hustle will accelerate your ability to invest more money into income generating assets above and beyond what you are already able to invest from proceeds from your ‘full time’ job. This in essence will supercharge the wealth building process and reduce the time that it takes to build wealth.
Building wealth isn’t so much about which plan you use. It’s that you adhere to the basic principles. Living well below your means, invest a significant amount of your income (30 to 50%) and accelerate the process by taking on a side hustle.
After all, it really is THAT simple.
