Many of my executive/owner clients are good at making money. As a matter of fact, some of them are experts at making money. BUT they are not so good at keeping the money. Months go by where little has been put away for investment and savings – instead, they reward their hard work by spending everything and more. The “more” is funded with debt. They reward themselves with first class tickets and luxury wardrobes. I absolutely understand their position and I never tell my clients that they don’t deserve to do these things – of course they deserve them.
What we try to identify is whether the choices they are making fit in with what they’ve ranked as important in their dream life. I have a friend who is fairly successful and is wealthy from both paid employment and side gigs. She has no qualms about traveling economy – all she cares about is getting to her destination. How she gets there is not part of the equation for her. Another friend is the complete opposite – for her travelling economy would be punishment. For her the journey is as important as the destination and she plans her spending accordingly.
In the same way, you will make spending choices based on what is important to you. Where I come in as a coach or mentor is helping you understand how your spending choices may not be helping you if your goal is to build wealth and to have enough money to live on when you get old. None of us wants to spend our twilight working because we have to and not because we enjoy it.
Wealth creation begins with proper money management. If you don’t understand the basics of money management, you can’t create wealth. Now don’t feel bad that you don’t currently have a full grasp of what that means. It starts with having control over our money. Being able to pay all our bills and have something squirreled away to deal with the unexpected and the future. We also put something aside that grows and grows – the method of growth will be discussed later.
Wealth is defined in many ways – one of the definitions that I like is that it is when the largest part of your income comes from the assets you put money into (invested in). In other words, you are no longer working for money. Instead the things you bought with your money are now generating money for you.
When people who earn over six figures a month are still broke, this suggests that just having more money isn’t enough to build wealth. There are clearly other factors that come into play.
To start to build wealth, you need to ask yourself a number of questions…
In Parts 2 and 3, we get to the questions you need to constantly ask yourself and show you how to get to grips with your spending.
See you next time…