Creating Wealth Secrets – More Money Is NOT The Solution, This Is

Creating Wealth Secrets – It’s Not How Much You MAKE; It’s How Much You KEEP That’s Important

It’s no secret that most people today live paycheck to paycheck, meaning they consume their entire paycheck within the month with nothing left over at the end of the month.  There are perhaps many reasons for this; many in this category may cite the fact that it’s due to their LACK of income that forces them to live paycheck to paycheck.

While it is true that simply having an extra $500 or $1500 a month may be enough technically to be able to allow many of these same people to no longer have to live paycheck to paycheck, the odds are that without increasing their financial education and improving their financial intelligence, they would most likely still be living paycheck to paycheck even with the extra money each month.

The fact of the matter is that “not enough money” is generally NOT the real underlying problem.  (That’s just great marketing on TV and in magazines that has convinced you that you just need access to more money – so you can spend more of course, which most people of course do.  Great advertising, right?)

Not enough money is the symptom (it’s what you feel, but it’s not the SOURCE of this financial pain); the cause is due to a lack of financial discipline, from a lack of financial education that results in having a low financial IQ that creates this perpetual problem that left uninterrupted will leave a person poor.  It’s not the dollar amount.

Creating Wealth Secrets – What do I mean Financial Discipline?

As I’ve written in previous posts on creating wealth, becoming financially free occurs once your passive income (from a residual income business or properly managed rental income property, for example) exceeds your monthly expenses.  In order for that to happen you must know exactly how much PASSIVE INCOME you’re creating each month AS WELL AS the amount of your monthly expenses.  That requires tracking your income and expenses, which most people just don’t do.  (How many people do you know who simply use their bank balance as an indicator for how well they’re doing?)

Another creating wealth discipline most people know about but just don’t do is paying themselves first and consistently every month (or from every pay check, etc).  Everyone knows they should set aside and SAVE 10% of their income each month and yet as simple a concept as this is, hardly anyone does it.  Do yourself a favor and grab the book “The Richest Man In Babylon” now – it will change your life if you apply the principles in that book alone.  Simple yet very profound.  Again, the importance of financial education.  (I discuss this topic further in my article 1st Steps in Creating Wealth – Begin By Paying Yourself First)

Also, certain expenses can be deducted against your taxable income, lowering the amount you pay in taxes thereby increasing the amount of money you have to reinvest into your residual income business or other asset to again increase your passive income to get you that much closer to creating wealth.  Such tax planning – like spending money wisely in the right areas – can help you reach your goal of financial independence that much faster (as long as earning income from a residual income business for example; no tax planning advantages for those only earning income as an employee – see my article on Creating Wealth – The Type Of Income You’re Making May Be Costing You The Most for more info).

As I’m sure you’ve seen or heard before, money has both the power to make you rich as well as poor.  Money after all is just an idea, a tool.  More money will simply amplify your current financial situation, good or bad.  More money is not the solution.  Financial education – learning the difference between assets and liabilities, good debt and bad debt, etc – is the remedy which will help you understand and better use the tool of money so you can keep more of your money which will allow you to move towards creating wealth.

Creating Wealth Secrets – The Problem of Too Much Money?

Here’s another truth: everyone has money problems, rich or poor.  The rich have the problem of TOO MUCH money while the poor have the problem of NOT ENOUGH money.  Which problem would you rather have?

How can someone have the problem of TOO MUCH money? Again, it all comes down to your mindset.  Think about it.

The wealthy and especially the rich are NOT where they are because they are great at spending money on a lavish lifestyle (that’s how the middle class get trapped – trying to keep up with the Jones’…).

The wealthy and rich have the problem of TOO MUCH money, because if they’re not financially intelligent with their money but rather just blow it all, they’ll end up on the street like anyone else would.  They have the problem of having to figure out where to put their money – how to invest it so that it will grow larger and larger and to ensure they don’t overpay their taxes (Uncle Sam will gladly take more than his fair share if you let him; it’s up to YOU – and the advisors you surround yourself with – to ensure you only pay your fair share).

And lastly, they have to ensure their wealth continues to grow at a fast enough pace so that a tiny percentage of their wealth can be enjoyed some without impacting the all important compounding effect…

(Rather than only setting aside maybe 10% of their income for their future and living on 90% of their income as advised above, the wealthy and rich try to live off only 10% of their income and set aside the other 90% to invest for their future.  This didn’t happen on day 1 but by slowly increasing their financial discipline from setting aside that 10% figure to start and then up from there as their income increased – versus increasing their lifestyle in step with their income as the middle class like to do – the rich and wealthy are able to get to a ratio of 50:50 and then to 90:10 and some even higher.  The point is it’s a different way of thinking and it comes from increasing your financial education.)

If you’re focused on creating wealth and moving your finances forward, you’re not interested in big one-time commissions or bonuses, you want that passive income so that your assets can provide you with that great lifestyle without you having to any longer pay for it or work for it.  You want to get as much out of life as possible, right? Then start by setting aside that 10% for now each month no matter what and work to increase that percentage as your income increases (and/or as your expenses decrease as a result of your simply becoming aware of them – try it I dare you!).

A Few More Creating Wealth Secrets

Change the way you think by increasing your financial education and increasing your financial intelligence. You can find a variety of resources, books, audios, games, etc in my creating wealth resources section on the tab at the top of this page.  I also encourage you to download my free “Dummy’s Guide To Creating Wealth” by simply filling in out the form at the top right of this page and pressing the submit button.

But, if you’re ready to begin the journey and start creating passive income today to get you closer to reaching financial freedom, click the following link now to watch this short video to learn how: Creating Wealth Secrets Video

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Hans Schoff
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3. Creating Wealth 101

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