Building Wealth

2006-07-16

Many people define wealth by what they buy, but they are wrong. Wealth is about what you keep. Buying stuff, whether it is cars, houses, jewelry, etc. It doesn’t matter if you are in debt up to your eyeballs and staring bankruptcy in the face. You see I’ve worked with clients who earned $150,000 a year, big house on the hill, nice Mercedes in the driveway. They looked wealth, very wealthy. But when it came right down to it, they owed more than they could afford to pay back. Then I’ve worked with folks who lived in a very modest house, earned $30-40k a year, clipped coupons, and drove a slightly used car. They appeared to have little, but in actually they had everything paid for and saved several thousand dollars a month. You see true wealth is owning something that no one can take from you.

It’s all a matter of priorities. It’s all about the choices we make on a daily basis. Do we buy that new “hot item” on credit or keep the old item that works great and is paid for. Not that credit is bad, because it isn’t. It’s the misuse of credit that is depriving you of true wealth.

Thomas J. Stanley and William D. Danko, authors of The Millionaire Next Door, learned that the average millionaire in America lives in a modest house, has an average household income of $135,000, buys a car that is typically 1 -3 years old, and saves money every month.

The biggest obstacle to building wealth is procrastination. You see we tell ourselves “We can’t afford to save right now, but when I get that promotion at work things will be better and we can save then”. The problem is next time never comes until it’s too late, and you guessed it, it’s then too late. You must make saving a priority now, not a year from now. To build wealth, you have to make difficult choices. Even if it’s only $10 a month, start saving something today.

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