5 Simple Rules To Creating Wealth
These are five simple rules that everyone should know when looking to create wealth. The concept of creating wealth is very simple to understand, what is difficult is the EXECUTION to create it. A legendary billionaire investor once said that, “Success is 1% ideas and 99% execution”. Millions of people have good ideas, but don’t know how to execute it.
Nonetheless, understanding the concept of creating wealth is quite simple and is the real first step to becoming rich.
1. Change your mentality – The most integral factor of creating wealth starts with the mind. It will guide all your actions and thoughts for the rest of your life and will determine whether you will ever be rich or not. One of the first things you must understand is that if you SPEND more than you EARN, you will have nothing saved and (not die broke), but live broke.
2. Understanding the value of items – Understand that CARS, CLOTHES, and ACCESSORIES have no real value. They do not generate income nor do they appreciate in value, so placing value on items of no value will only make you poor. This is the second biggest mistake that individuals make. Let us use a common mistake that people make. Instead of buying a house they buy a car. A man or woman who bought a house two years ago would have seen their wealth increase by almost 50% in Jamaica, while an individual that bought a car would have seen their wealth decrease by 50% in the last two years.
3. Understand that money by itself has no value – A $100 note will always and forever be worth only $100. But with inflation and devaluation, over time, that $100 note has even less and less value. Put $100 under your bed today and I guarantee you that by next year that $100 cannot by the same thing that it can today. Another grave mistake that people make which is even worst than putting value on money is back to point #2 which is placing value on items that have even less value than money itself. Based on devaluation and inflation in Jamaica last year, if you were to keep money under your bed (as many of us Jamaicans do) that $100 would have devalued by 17% in one year alone. Now what is absolutely worse is buying an item that devalues even faster, like a cell phone or clothes.
4. Good debt vs. bad debt – Most of us are afraid to borrow. But as we all know, debt can be considered good and bad, depending on how you use it. As I said, the key is how you use it, if you borrow money to buy a house and rent it out and have the rent pay the mortgage, that house will not only provide you a second income but also appreciate in value. If you borrow money (in the form of a credit card, that is a monthly loan to which your bank gives you access) to buy clothes (another item of no value) then that is considered bad debt. As you have borrowed money at a high interest rate to purchase an item that neither appreciates in value nor generates income.
5. Learn to see opportunities where others fail to – Most of us tend to see problems very easily, while successful people see opportunities where you see problems. Think about any successful business and try to figure out why they exist or why they were created. Most if not all were created out of a need to correct and solve a problem. Think about Microsoft, Ford Motor Co., Band Aid, Boeing, you name it. They all saw a problem and found a need to solve the problem. In the early days of computers, they were very difficult to use, so Bill Gates invented Windows and look how easy it is to use a computer today. In the early 19th century walking or riding a horse was very time consuming and tiring, and that is why Henry Ford invented the Ford Motor Car, now look how easy it is to travel.
These five simple rules, although only a part of a bigger picture, may seem quite daunting at first but if executed correctly will have you well on your way to becoming wealthy.
Tags: Bad Debt, Creating Wealth, Good Debt, Understanding Wealth, Wealth, Wealth Creation, Wealth Opportunities
Wealth | admin, 6 Jun 09 | 
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