To Become Wealthy, You Must First Do This…
Everyone wishes they could win the lottery, right? It’s kind of the universal fantasy, and it’s a compelling one.
So compelling, in fact, that every week, millions of people head down to the gas station and line up to buy a lotto ticket or a scratcher, and in that span of time between buying the ticket and finding out they didn’t win, these people dream of what they would do with all that money.
They dream of the freedom they’d have.
They dream of what they’d be able to do for others.
And many people dream of the luxuries they’d finally be able to indulge in.
Dreaming of Being Wealthy
The strange, sad thing about it is that most people who do win the lottery don’t wind up wealthy. In fact, for many lottery winners, they wind up just as down and out as they were before.
Despite all the hopes and dreams they have for their winnings, they fall right back to the level they started at, and it’s not because of taxes or a curse on lottery winners or anything like that.
They lose their riches because the first step to being wealthy is to be a good steward of your money.
It’s as simple as that. When you learn to mind the pennies, the pounds (or dollars) look after themselves.
Not only do you need a plan to save, you also need a plan to spend, and a plan to grow.
No one knows this better than my recent guest, Eben Pagan.
Eben is the epitome of the modern self-made man, but that wasn’t always in his plan. In fact, when he created his massively successful eBook called Double Your Dating, he wound up with a lot of money – almost by accident.
The book’s success skyrocketed, and as his sales grew, so did his influence – everyone wanted to know more about how he did what he did, so he began to teach people the ins and outs of building online products and selling them in the world of information marketing.
Today, he’s an entrepreneur, author, and speaker. He’s well known for his expertise on all things business, marketing, and personal development. He’s even been chosen by Tony Robbins as a “New Money Master”.
It Wasn’t Always This Way For Eben
When he first found success, he said it was like he had a hole in his pocket. The money drained out almost as fast as it came in. To this day, he says it’s important for him to focus on a few key things to make sure that doesn’t happen anymore.
Here are his steps to being a good steward of money so you can build long-lasting wealth.
- Understand True Value
When you’ve never had a large sum of money before, true value can be a pretty hard thing to determine. After all, a Maserati, a Rolex, and an investment property are all really expensive, so they’re all pretty valuable, right?
Unfortunately, that is incorrect. Some things – like the house – will hold their value, make you money, and even appreciate over time. Other things – like the car and the watch – won’t hold their value. If you decided to sell them after a while, you’d find out that they lost a lot of their value the second they came into your possession.
If you want long term wealth, you have to develop an understanding of what is and isn’t valuable. Just because something is really luxurious or desirable doesn’t mean it’s valuable.
Now, that doesn’t mean you shouldn’t treat yourself to the finer things in life when you can easily afford them. It just means you need to understand that these things are liabilities, not assets, and weight their importance in your life and your financial plan accordingly.
- Invest For The Long Run
When you know the difference between assets and liabilities, you need to create a long-term plan for your money. Eben credits Robert Kiyosaki as a great teacher of this concept in his books such as Rich Dad, Poor Dad.
Make Money Work For You, Not The Other Way
Basically, when you know the difference between assets and liabilities, you can learn to invest for cash flow and learn to allocate your funds so you have less of a tax burden. Using our previous example, if you use your funds to buy a car, you’re using post tax dollars to buy an item that will be fun to own, but will immediately lose value. You’ll have to pay taxes and fees and upkeep on the car, and it will never make you money – only cost you.
If you were to take the same chunk of money and buy an investment property, however, not only will you get a tax break just by owning the house, you’ll also make money back in the form of rent. Should you decide to sell the property in the future, chances are good you’ll make a profit because of appreciation.
And this multiplies, too, of course. Buy two cars, that’s two liabilities sitting in your driveway, draining your accounts. Buy two investment properties, on the other hand, and now you’re starting to really make some money back.
Of course, real estate isn’t the only way to invest and see a return. Some people prefer the stock market, while others are into buying and selling art. Still others put their money into cannabis or cryptocurrencies. All of these are fine ways to make a long-term plan for your wealth, if you know what you’re doing.
And as Eben says, if you can become a good steward of your money and get enough of these investments to become profitable, then you, too, can truly be wealthy. No lottery ticket needed.
Editor, Brian Rose Uncensored