Wealth Creation


Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.

Wealth refers to value of everything a person or family owns. This includes tangible items such as jewelry, housing, cars, and other personal property. Financial assets such as stocks and bonds, which can be traded for cash, also contribute to wealth. Wealth is measured as "net assets," minus how much debt one owes.

The term happiness is used in the context of mental or emotional states, including positive or pleasant emotions ranging from contentment to intense joy. It is also used in the context of life satisfaction, subjective well-being, eudaimonia, flourishing and well-being. Thus happiness can come from wealth that brings life satisfaction.

Building wealth can be one of the most exciting and rewarding undertakings in a person's life. Aside from providing a more comfortable day-to-day experience, substantial net worth can reduce stress and anxiety by freeing you from worry about putting food on the table or being able to pay your bills.

For some, that alone is enough motivation to start the financial journey. For others, it's more like a game, and their passion for wealth building begins with their first dividend check from a stock they own, interest deposit from a bond they acquired, or rent check from a tenant living in their property. Considering the following points can help you better understand the nature of the challenge you face, as you set to the task of accumulating surplus capital.

Change the Way You Think About Money

The general population has a love/hate relationship with wealth. Some resent those who have money while simultaneously hoping for it themselves. There are exceptions, but the reason a vast majority of people never accumulate a substantial nest egg is that they don't understand the nature of money or how it works. This is, in part, one of the reasons that the children and grandchildren of the wealthy have a so-called "glass floor" beneath them. Just by way of which family they're born into, they receive knowledge and networks that allow them to make better long-term decisions—often without fully realizing how they're benefiting.

No matter the household you grew up in, the key is to push to move past selling your labor (work) to making your money work for you. Each dollar you save is like an employee. The goal is to make your "employees" work hard, and, eventually, they will start making their own money. When you have become truly successful, you no longer have to sell your labor, and you can live off of the labor of your assets.

Understand the Power of Small Amounts

One of the mistakes most people make when trying to figure out how to get wealthy is that they think they have to start with an army of funds. They suffer from the "not enough" mentality: “I don’t have enough money to invest.” They believe if they aren't making $1,000 or $5,000 investments at a time, they will never become rich. However, armies are built one soldier at a time—so too for your financial arsenal.

You don't necessarily need to become frugal, but small funds can eventually become millions of dollars, as long as you see the potential and start saving.2?
With Each Dollar You Save, You Are Buying Yourself Freedom

Money can work for you, and the more of it you employ, the faster and larger it can grow. Along with more money comes more freedom—the freedom to stay home with your kids, to retire and travel around the world, to quit your job. If you have any source of income, you can start building wealth today. It may only be $5 or $10 at a time, but each of those investments is a stone in the foundation of your financial freedom. Once financially independent, you're no longer tied to a job or employer; you're free to do what you want because you're creating your own income.

Building Wealth Takes Time

Some people are reluctant to make a wealth-building plan because they don't want to wait 10 years to be rich. They would rather enjoy their money now. The folly with this type of thinking is that most of us are going to be alive in 10 years. The question is whether or not you will be better off 10 years from now than you are today. Where you are right now is the sum total of the decisions you have made in the past. Why not apply that mindset to decisions you can take now to yourself up for success in the future? Your life reflects how you spend your time and money.

Consider Becoming an Owner

One of the big intellectual and emotional hangups people seem to have when they aren't exposed to wealth is making the connection between productive assets and their everyday life. An investor understands, on a visceral level, that if they own shares of a company such as liquor and beer manufacturer Diageo, and someone around them takes a sip of Johnnie Walker or Guinness, a portion of the money they paid for the drink will make its way back to them in the form of a dividend. With just a single share in Disney, an investor can watch guests stream into Disneyland, knowing that they enjoy their share of any profits generated from the theme park.

One of the strategies of the wealthy is to use their income to acquire productive assets their friends, family members, colleagues, and fellow citizens partake in. They make money (albeit, indirectly) every time you take a bite out of a Reese's Peanut Butter Cup, drink a Coca-Cola, or order a Big Mac. If you've ever taken out a student loan or borrowed money to buy a house from a bank like Wells Fargo, you've sent Wells Fargo investors real cash.

Study Success and Those Who Have Achieved It

In societies such as the United States—where for centuries, fewer and fewer millionaires and billionaires are first-generation or self-made—building wealth is often the by-product of behavioral patterns that are conducive to building wealth. Replicate the behavior and net worth tends to accumulate.

Look for financial lessons not only in real-life examples, but in literature, film, TV, and other stories. These financial parables will help you understand the sometimes-complicated nature of investing for long-term gains.

You'll find that by investing in yourself first, the money will begin to flow into your life. Success and wealth beget success and wealth. You have to purchase your way into that cycle, and you do so by building your financial army one soldier at a time and putting each dollar to work for you.

Realize That More Money Isn't the Answer

More money is not going to solve all your problems. Money is a magnifying glass; it will accelerate and bring to light your true spending habits. If you are not capable of properly budgeting a $25,000 salary, bumping your pay up to six figures won't solve the problem. You may be surprised to learn that nearly 1 out of 5 people earning $100,000 a year live from paycheck to paycheck, and they don't understand why it is happening.3? The problem isn't the size of their checks, it is the spending habits they have built up over the years.

Unless Your Parents Were Wealthy, Don't Do What They Did

The definition of insanity is doing the same thing over and over again and expecting a different result. If your parents were not living the life you want to live, then don't do what they did. You must break away from the mentality of past generations if you want to have a different lifestyle than they had.

Pay Off Debt, Save and Invest

To achieve financial freedom and success, which your family may or may not have had, you have to do two things. First, make a firm commitment to pay off any debt you have.4? Identify which debts should be paid off before you invest and tackle those debts first. Second, make saving and investing the highest financial priority in your life (one technique is to pay yourself first).

Properly invested in interest-bearing savings accounts and stocks, these funds can generate passive income, which is a key component of how to get rich.

With passive income, you can create cash flow without even having to get out of bed in the morning. Learn about the different types of passive income so you can start to build your net worth beyond what's possible with a 40-hour workweek.

The Bottom Line: Don’t Worry!

The miracle of life is that it doesn't matter so much where you are, it matters where you are going. Once you have chosen to take control back of your life by building up your net worth, don't give a second thought to the "what ifs." Every moment that goes by, you are growing closer and closer to your ultimate goal—control and freedom.

Every dollar that passes through your hands is a seed planted for your financial future. The day will come when you make your last payment on your car, your house, or whatever else it is you owe. Until then, enjoy the process.


Unless you were born into a rich family, building wealth can be very hard — depending on the path you choose.

Many people look at multi-millionaires and desperately want to know: What’s their secret? How did they get there? What does it take?

Those are the things I wanted to know back in 2004, when I began my “Rich Habits” study, in which I spent five years interviewing and researching the daily activities, habits and traits of 233 wealthy individuals. All of them had at least $160,000 in annual gross income and $3.2 million in net assets. During my research, I found there are four predominant paths toward accumulating wealth. The “Savers-Investors” path is the easiest, while the other three involve much more risk.

1. The Saver-Investors path

Just less than 22% of the millionaires in my study chose to take the Saver-Investors path. Not only is it the easiest way to build wealth, but if you start early, it almost always guarantees a lot of money.

The Saver-Investors in my group reached their first $1 million around their mid-to-late 30s, and accumulated an average net worth of $3.3 million by their mid-50s.

They also had four things in common:

They typically had a middle-class income (many reached a six-figure salary early in their career, and if they didn’t, they lived very frugally.)
They had a low cost of living and preferred to save, rather than spend lavishly.
They saved 20% or more of their income.
They started investing their savings early in life and continued to do so prudently for many years.

No matter what their day job was, this group made saving and investing part of their routine; they were constantly thinking about smart ways to grow their wealth.

The Savers-Investors path isn’t for everyone. It requires enormous financial discipline and long-term commitment.

2. The Dreamers path

This is perhaps the hardest path to building wealth because it requires the pursuit of a dream, such as starting a business, becoming a successful actor, musician or author.

Approximately 28% of the folks in my study were Dreamers, and they accumulated an average net worth of $7.4 million — far more than any of the other groups — over a period of about 12 years.

All of them told me that pursuing their dreams was one of the most rewarding things they had done in their lives. They loved what they did for a living, and their passion showed up in their bank accounts.

Those who want to take this path, however, must be willing to work long hours and able to handle financial stress. The Dreamers in my study worked more than 61 hours per week before finally achieving their dreams. Weekends and vacations were almost non-existent.

Trying to make ends meet was not easy. At first, getting a steady paycheck was “nearly impossible,” one Dreamer said. It was even harder for those who had families to support. To finance their dreams, some decided to put off buying a home, while others dipped into their retirement savings.

If you’re risk-averse, this next path may not be for you.

3. The Company Climbers path

Climbers are individuals who work for a big company and devote all of their energy into climbing the corporate ladder until they land a senior executive position.

This is the second-hardest path to becoming a millionaire, and about 31% of the rich people I studied fell into this group. It took them an average of 22 years to accumulate a net worth of $3.4 million or more. In most cases, their wealth came from either stock compensation or a partnership share of profits.

To be a Climber, you must have strong relationship-building skills. Networking and making lasting connections with powerful people in your industry is essential.

Like Dreamers, however, Climbers also have long work hours. The ones I interviewed all arrived at the office early and left late. Many were required to travel frequently and even had to sacrifice a lot of their vacation time.

Profitability is a huge factor in determining a Climber’s success. If their company struggles financially, their time and investment there might not be rewarded to the extent they had expected.

4. The Virtuosos path

Roughly 19% of the participants in my study chose this path. Virtuosos are among the best at what they do in their profession. They are paid a high premium for their knowledge and expertise, which sets them apart from the competition.

It took the Virtuosos in my study about 20 years to reach an average net worth of $4 million. Some worked in the medical field, while others worked in law. A handful either worked for large, publicly-held corporations, or they were small business owners with highly profitable enterprises.

Of course, Virtuosos aren’t necessarily born with natural intelligence. They must spend many years continuously studying and learning. Formal education, such as advanced degrees, is usually a requirement.

This means investing an enormous amount of money and time before seeing any payoff at all. Not everyone has the ability to devote significant hours every day practicing their skill or the financial resources to pursue advanced degrees.


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