Warren Buffett is considered the world's greatest investor by many people. At the time of this writing, he has nearly 67 Billion dollars to his name. That's Billion with a B. To put that amount into perspective, this guy could drive down the road every day for the next 20 years and throw 9 million dollars out the window, and still have money!
My point is, when Warren speaks about investing, I listen! He once said,
Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you. They can run up huge deficits and the dollar can become worth far less. You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold.
Follow Warren's advice and invest in yourself! Study what successful people do! Many people before you have become millionaires, and you can too with a little knowledge and hard work. So how does the average millionaire get to where they are?
It might be helpful to take a step back and look at what the average millionaire looks like. The average millionaire is in their mid to late 50's. They are married, with three kids. More than 90% of all millionaires are married, with an average marriage length of almost 30 years.
80% of these people are first-generation millionaires, meaning they weren't given their money, they had to earn it! In the process, they learned how to manage their money according to the research done for the book The Millionaire Next Door: The Surprising Secrets of America's Wealthy.
The formula for building wealth is incredibly simple, yet many still seem to find it difficult to implement. Make more than you spend, and invest the savings into places where it will grow. In other words, the average millionaire got there by hard work, saving, and investing their savings into assets like businesses that make them more money. They also invested in their own education, reading about how others succeeded, which allowed them to increase their earnings over the years.
A practical step you can take in the right direction is to come up with a spending plan each month, and figure out what you want to do with your money before you spend it. If you do that, you don't end up at the end of the month broke wondering, “Where did all my money go?”
If you're broke and aren't taking care of that, you won't be able to invest in anything!
Here is a great story of a man who went from being homeless to a multi-millionaire, making only $50,000 a year at his job. How did he do it? By saving money, and investing what he saved in a few rental properties and mutual funds over a number of years. Pretty simple math, with a little discipline anyone, yes – even you, can do this!
I've read many many books on this subject, and have personal experience with building wealth and getting out of debt. Here are the 10 steps I believe are critical for building wealth. Following this process, I have added another $100k to my own net worth while raising 5 kids over the last 3 years.
- It Can be Done
- Pay Yourself First
- Give Some Away
- Create a Plan
- Execute the Plan
- Prepare for Emergencies
- Work Hard
- Find Mentors
- Enjoy Life
Continue reading for more details on each of these steps: 10 Steps to Creating Wealth