- Millionaires will tell you that there are no shortcuts to building a strong financial foundation that will help you build wealth.
- Hard work, persistence, consistency, patience, and good habits are all critical.
- There are four simple, if not easy, steps to take if you want to get rich over time.
In my Rich Habits Study, I interviewed 233 millionaires, with at least $160,000 in annual gross income and $3.2 million in net assets.
One of the many revelations of the study was that the life you have is a reflection of the foundation you’ve built during your adult years.
If you work hard and sacrifice for many years, you can build a strong financial foundation that will pay dividends down the road.
There are four steps you must take in order to be financially successful:
1. Become a virtuoso
A virtuoso is someone who sits at the top of their field as an expert. When you are a virtuoso, people will pay a premium for your knowledge and skills. It takes effort and good daily habits to become a virtuoso:
- Purposeful reading: Limiting your reading to books/articles that expand your knowledge in a specific field.
- Purposeful practice: Practicing specific techniques in various ways in an effort to master that technique.
- Purposeful study of facts: Limiting your study to facts that are specific to a topic and focusing on that topic until every fact about it is known.
2. Live below your means to increase your surplus income
Living off 80% or less of your income will leave you with an excess you can use to build wealth.
3. Save and invest your excess income
Once you have forged the habit of living below your means, you can save your excess income and then invest it so that it will grow. This growth can compound every year, and in later years can accelerate until it’s quite substantial.
4. Create multiple streams of income
Many of the self-made millionaires that I write about in my bookshad multiple streams of income, often devoting a decade or more to each revenue stream until it began to pay dividends. Once the revenue stream became self-sufficient, they moved on to building the next revenue stream, then the next one, and so on.
These multiple income streams generate cash flow that can come to the rescue when economic downturns or other things outside of our control negatively impact one or more sources of income. Plus, you can invest the extra money, which leads to increased compound growth of your investments.
There are no shortcuts to building a strong foundation for financial success. Hard work, persistence, consistency, patience, and good habits are all fundamental to building wealth. It takes many years to build a strong foundation, but the longer it takes, the stronger it will be.
Read it on businessinsider.com