8 Steps to Wealth: A Primer

16 Jun 8 Steps to Wealth: A Primer

8stepstowealthIt’s time to start taking financial responsibility and building your wealth. It doesn’t require an MBA in finance. It simply requires an understanding of the 8 fundamentals steps that will consistently lead you to a more successful and fulfilling life.

Below I will cover these 8 steps in brief.  Do the exercises if you really want to learn and understand!

Step 1: Financial Conditioning

Your psychology will always be impacting your decision making process along your wealth building journey. We’ve been conditioned about our money beliefs since we were young. Our beliefs are not our ideas or goals about money, they drive our results.

  • Write down what your current money results are now and what results you really want
  • Now write the actions that have produced your current results and the actions it would take to get the results you want
  • Then write down the words you currently use about money and compare it to the words you would want to use instead. (Your language around money)
  • Last, write your thoughts about money in general as they are now and then as you want them to be

Step 2: Financial Baseline

This is critical. It’s a reflection of your past financial awareness. Whatever conditioning has brought you to this very moment in your financial life has created the results.

  • Organize all of your financial papers together
  • Complete a personal profit and loss statement (Google this if you don’t know how)
  • Complete a personal balance sheet (include all assets and liabilities to determine your net worth)
  • If you own a business, do the same for it and include a P&L

Step 3: Your Financial Freedom Day

This is the declaration of your vision: where do you want to ultimately end up financially? Be specific.

  • How much money (cash flow) do you receive each month?
  • What do you want your net worth to be?
  • At what age?
  • By what day/month/year?
  • Do you have plans to achieve this desired wealth?

Step 4: Managing Your Lifestyle Cycle

Managing your lifestyle cycles is where you begin to make choices about your lifestyle. A lifestyle cycle is a cycle of bad debt. It’s a trap.

Bad debt is typically defined as consumer debt or debt that doesn’t allow you to produce any revenue from it (credit cards, “toys”, etc.)

Good debt is debt that is acquired through the purchase of assets that are then invested to produce passive income (mortgage on a rental property, a line of credit strategically done to enhance the growth of your business).

Step 5: The Foundation of Your Wealth Cycles

This is where you structure and automate your wealth plan so your foundation is handled; your kid’s college tuition is taken care of, you have retirement money, your insurance needs are met..

  • Clarify the decision of being an active or passive investor
  • Choose the appropriate investing strategies
  • Develop and commit to money rules

Step 6 – Acceleration of Your Wealth Cycles

This is the step all about learning investing strategies, tax benefits and entity structuring — and applying them.

Step 7: Leadership of Your Wealth Team

No one we know has ever become wealthy doing it alone. They’ve all had a team. And, to enact a team, you need to learn how to communicate, lead and negotiate.

The 5 “Cs” of leadership are:

  1. Character – the ability to achieve moral excellence
  2. Capacity – the ability to receive or accommodate
  3. Credibility – the ability to be believable and trustworthy
  4. Courage – the ability to conquer your fear or despair
  5. Communication – the ability to exchange information

Step 8: Creating Sustainable Wealth

There are three essentials to creating a sustainable action plan.  These are:

  1. Commitment
  2. Focus
  3. Accountability

Earners are learners!

Keep yourself educated about your finances and you can reach those dreams of yours!

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1Comment
  • Rick Cooper
    Posted at 16:49h, 16 June Reply

    This is a powerful formula for building wealth! Thanks Loral.

    Read Loral’s Millionaire Maker book series for the best information, tips, strategies and ideas to start making more money and build wealth!

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