Are you sitting around dreaming of owning a Lambo and a huge house? Most of us grow up with the idea that we’ll be rich one day, but very few of us get to achieve this goal. So, how do the rich get rich? That’s a question thousands of people ask every day, and hardly anyone figures the answer out before they retire.
However, the answer is less complicated than you think. Rich people have a different mindset when it comes to money. They understand the power of leverage and how to use it to their advantage. Rich people also hang out with other rich people, and they reach up in their relationships, not down.
Because of this behavior, then chances are you’re not going to meet many rich people if you’re broke right now, you’re just not the type of people they hang around with during their free time.
We decided to give you an actionable plan that you can use to start improving your financial position. It can take years to achieve your financial goal of having more money than you know what to do with, but you’ll get there if you persist.
Step 1 – Change Your Money Mindset
The first thing you need to do to get rich is to change your mindset. Many Americans live in a scarcity mindset. They think that money is hard to come by in life. However, this is merely your perception. Every day, the Forex market trades over $5-trillion in currency. You need to figure out a way to tap into that source and take some of it for yourself.
Therefore, changing your mindset from the point of scarcity to abundance should be your first step in getting rich. With a mindset of abundance, you change your thinking, and you no longer think that there are any limitations on what you can achieve with your life.
Here are our top tips for building a millionaire mind.
Invest in Your Financial Education
It’s surprising how many people want money, but don’t know the first thing about how money works. If you don’t know anything about money, how can you expect to put yourself in a position to attract it to you?
People that win the lottery will usually find themselves back in the same financial position of being broke some months or years after collecting their payday. That’s because they might have come into money, but they still have the same understanding of how to manage their new fortune that they had when they were broke.
Start researching all you can find online concerning improving your financial literacy. Watch videos on YouTube, and read financial articles like this to enhance your understanding of how money works.
Find a Mentor
Walking your financial path in life alone is a hazardous task. Along the road to financial success, you’ll find plenty of potholes that are waiting to slow you down. Finding a mentor is the best way to mitigate this risk and fast track yourself and your bank account to financial freedom.
A mentor doesn’t have to be a physical person that you consult with using a face-to-face scenario. Mentors exist online on YouTube and websites geared toward helping people find financial freedom. You can learn plenty by watching a few videos in your spare time, instead of checking out some mindless comedy series on Amazon or Netflix.
Mentors help you identify the pitfalls in your path to financial success. These individuals have already gone through what you’re experiencing, and they dedicate their lives to helping you avoid their mistakes. By taking the advice of a mentor, you can fast track yourself to financial freedom.
Join a Mastermind Group
Every great mind needs others to collaborate with on important life decisions. Joining a mastermind group of successful people is one of the best ways to help you succeed on your journey to financial freedom.
Your mastermind group should consist of other like-minded individuals with similar financial goals to you. You should always feel like you’re not the smartest person in the room when hanging out with your mastermind group. If you do feel like you’re the smartest, then you need to find another mastermind group to help you grow.
Remember, it’s crucial to reach up in your relationships, not down.
Attend Seminars and Conferences
This strategy is a great way to meet potential mentors and mastermind groups to further your financial education. There are plenty of free conferences held throughout the year in your town. You can learn plenty from these conferences, and all it costs you is your time.
Many of these conferences also host networking events where you can meet other people with the same mindset as you. Most of the people attending these events are enthusiastic and hungry, just like you. Therefore, you might find a new business partner or someone that can introduce you to a new network of contacts.
Step 2 – Money Matters
Your money matters. Without money, we have a hard time in life, and struggling to get by is not something anyone wants to live through. In this section, we’ll show you how to get your money right.
Hire an Advisor
If you have low levels of financial literacy, and you’re wondering why you’re always broke at the end of the month, then you need some help with managing your finances. Fortunately, there are trained professionals that can help you with correcting this problem.
Meet with a financial advisor and let them go over your finances. The advisor will account for every cent leaving your bank account. They also make a list of your expenses and work you out a budget for your monthly spending. You can track your budget using a free app like Personal Capital to control your spending habits.
Your financial planner can also help you work out a plan for savings and investments as well. If you want to be rich, then you’ll need to learn how to get your money to work for you rather than have you work for your money.
A financial advisor can help you set savings targets and advise you on the best way to invest your savings and how to start earning passive income. Passive income is money that you make from the return on your investments. As a result, you end up having more free time while your money does the hard work.
Research shows that the earlier you start investing, the better. Most people start with a 401(k) plan and an IRA and then start diversifying into other assets as they max out their contributions to these funds. A financial advisor can help you find other investments that are in line with your financial goals.
You need to start small and then build your investment portfolio over time. Most millionaires only reach their financial goals in their late forties, so the earlier you start, the sooner you’ll be in a position to grow real wealth for you and your family.
Control Your Spending Habits
Do you know where your money goes every month? As mentioned, constructing a budget to help you manage your spending is the best way to control your spending habits. However, you can try playing a game with yourself where you try to spend as little money as possible throughout the month.
Living a frugal lifestyle might seem like you’re cheap at first. However, after a few months, your spending habits will change, and you’ll find yourself putting more thought into each purchase you make. Instead of rushing to checkout with your product, you might find yourself questioning if you need it or want it – there’s a significant difference between the two.
Eventually, you might find yourself walking around without your wallet. Some of the richest men in the world are frugal. Take Richard Branson, for example. The founder of the Virgin Group travels without his wallet. He states that he can’t remember the last time he had to pull out cash or a credit card to pay for anything.
Monitor Your Net Worth
Do you know your net worth? An app like Personal Capital can help you figure out your current net worth and track changes in it over time. Your net worth is the sum of all of the assets you own.
Cash in savings accounts, investments, and physical assets like your home and jewelry all count toward your total net worth. Understanding your financial position is the key to improvement.
Step 3 – Grow Your Money
When you start to taste the beginnings of financial success, it will motivate you to ramp up your efforts. After a few years of building your savings and basic investments, it’s time to get your money working for you.
The biggest secret of the rich is that they understand the power of leverage. Leverage means that you use your money to work for you and produce income, rather than working for your money. Below are a few examples of investments that earn passive income.
Real estate is the backbone of any investment portfolio. However, the home that you live in doesn’t qualify as a real estate investment. If you live in your home, it’s a liability. Every month you need to pay the mortgage from your salary, making it nothing more than a glorified savings program.
Rich people buy apartments and single-family homes that they can rent out to tenants. If the cost of the mortgage and the expenses involved with running the property are less than what you get in rental income, you’re winning. This situation provides you with a “positive cash flow” on the property.
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The stock market is near the end of the longest bull run in its history. For the last 10-years, stocks continued to trend upwards. If you invest in the stock market, you’re using your money to make more money through investing in companies.
You can choose to invest in the market using an active or passive strategy. A passive strategy gives you a “hands-off” approach to managing your investments. In this scenario, you hire an investment manager to make investments on your behalf.
With an active strategy, you handle your investments yourself. However, to manage your investments, you need specialized knowledge on how to trade the markets.
Buy a Business
Buying a business is a great way to invest your money into an asset that has the potential to produce exponential returns on your money. However, don’t make the mistake of founding a startup company. Startups are for the tech sector.
Instead, focus on buying a cash business instead. A cash business is a car wash or a laundromat that already has a management team and staff in place. Therefore, the business is already a going concern, and you don’t have to worry about setting up the systems to run the company, as you would with a startup.
As a result, you’ll be earning profit from day one, instead of waiting months to see if your startup gains traction. There’s a much lower failure rate when buying a going concern, but always remember to have your accountant go over the books before you buy it.
Wrapping Up – Take MASSIVE Action
The biggest thing that separates the rich from the broke is their mindset on execution. Rich people take massive action all the time. There’s not a moment of the day that they don’t fill with priority tasks designed to move them forward in life.
If you find that you’re struggling to take action in your life, then it’s most likely because there’s something you don’t know holding you back from making progress. For example, if you’re on safari walking around the savannah, and rhino charges you, you might feel the temptation to run away.
If you do, the rhino will chase you and trample you to death. However, if you hold your ground and make a noise, the rhino will stop dead in its tracks before reaching you. This example shows that knowledge is power, and knowing what to do in the right situation can save your life.
The same applies to your financial position. If you want to be rich, but you’re always broke, then there’s something you don’t know about money. Take action and use the tips in this article to figure out the knowledge you need to gain millionaire status. Good luck.