The Process of Becoming Wealthy

Wealthy

Is it possible to get rich quick? No. Building wealth is a slow process. Think of it as planting a tree from a seed. If you plant the seed on a Wednesday you don't have a full grown oak by the weekend, do you? No. It takes disciple to get up and water your seed several times a week. Maybe you have to put fertilizer on it. Then there's bug control and annual pruning. After many years, you'll finally have your full grown oak. Getting wealthy is the same process. It takes discipline, hard work and sacrifice. The truth is it is probably much easier to be poor but if you are one of the special few, I'll share the process of wealth building with you.

The Process of Becoming Wealthy

How does one become wealthy? This is a question as old as time itself. Some are privileged enough to learn the answer to this question early in life while others never learn the answer. They spend their lives living in want, undue stress and desperation. For those who commit to something better, here is the process of getting wealthy at no cost to you.

1# Establish an emergency fund! This is absolutely critical. An emergency fund prevents you from acquiring troublesome high-interest debt. High-interest debt kills more wealth than a fox kills chickens in a hen house. Build up your cash reserves for life's emergencies and say no to high-interest debt! Banks and credit unions are fantastic places to store your emergency fund.

2# Avoid Most Debt! Not all debt is the same. There is good debt and there is bad debt. The difference is one type of debt can actually make you wealthier while the other debt (bad debt) makes you poorer. An example of good debt is a home or maybe a business loan. An example of bad debt is a credit card. If you already have credit card debt your first priority is to pay it off! If you have multiple credit cards, a consolidation loan will help but you must not get into trouble again after you wipe your credit cards clean. After you pay off each card, go ahead and cut it up.

3# Get you know yourself! Huh? I know what you're thinking. You are thinking that you already know yourself. I beg to differ. I think you probably don't really know yourself. Out of all the steps I'm giving you, this one is the most critical. You have to know yourself because knowing yourself will shape your investing strategy. If you judge yourself wrong, you will lose thousands of dollars investing. Did you just hear what I said? I'll repeat it. You will lose thousands! This is how so many people lose money in the stock market. They lose money because they don't know themselves. Are you comfortable with risk? Are you the type of person that loves the largest roller coaster at the amusement park? Or are you happiness on the merry-go-round? These are the details you need to know about yourself. Can you sleep at night owning a risky investment that has fantastic potential for monetary reward or does just the thought of owning something like that give you ulcers? Either way, there is an investment strategy for the risky and the conservative. You just need to know yourself so you can pursue the right course of action.

4# Read everything you can get your hands on! Buy and read financial books, don't worry about the money too much, consider each purchase an investment. There is so much knowledge out there and I've realized the best way to become wealthy is to study the wealthy.

5# After you've read everything you can get your hands on for at least three to six months only then are you ready to invest! You'll need to open a mutual fund or a brokerage account. You have to pick the type of account based on KNOWING YOURSELF.

6# Regularly invest money into your account! I recommend investing a portion of your salary at least monthly. This is a strategy called Dollar Cost Averaging. This strategy allows you to forgo trying to time the market and purchase shares that average out in the long run. Sometimes you'll buy shares at market peaks, sometimes at market lulls. The trick is by using this strategy your mutual fund/common stock purchases average out in the long run. Here is a simple example. Suppose one month you purchase one share of stock at $20. The next month you purchase one share at $10. Now, in your portfolio, you have two shares of stocks averaged at $15 a share. Do you see how Dollar Cost Averaging works? This is a powerful strategy that simplifies investing and it can lead to some awesome returns.

7# Let you money stay put! There is always pressure to sell. The media barks about a financial crisis every other week. Your car may break down. Your friend Susan may need a loan. There is always some perceived crisis demanding your money. For you to really become wealthy and I mean really wealthy, you must resist these types of urges and not sell. Emergencies will happen but your investment accounts must stay off limits. Emergencies are for your fully funded emergency fund. Not your investment accounts. Investment accounts are for long-term growth and wealth accumulation. Leave those accounts alone, make them off-limits and watch your wealth and riches rise with time.

This is the process of getting rich, now go out there and start your journey. Start with feeding your brain. Your mind is the key to wealth. Nourish it with financial books. You can never have too much knowledge and the small price you pay for knowledge will pay you back a thousand times over.

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