Apart from the amount of money in the bank what are the key differences between someone who had little to their name vs someone who has millions in the bank? Millionaires cannot be pinpointed to; a specific location, ethnicity, particular level or type of education, up brining or social background. So background does not dictate if you will be a success or not, however there are some key behaviours that they all DO have in common.
- Harv Eker, ‘Secrets of the Millionaire Mind’, says “you can have all the knowledge and skills in the world, but if your ‘blueprint’ isn’t set for success, you’re financially doomed.”
The ‘blueprint’ refers to the behaviours, mindset and habits that they have and all share in common that makes success and wealth inevitable. If you compared someone with no money vs someone with large net worth it is very clear that they have completely different outlook when it comes to money management and cash flow. The rich know how to make their money ‘work’ for them generating more money where as the other group work for money.
You do not have to have a bulging bank balance to start changing your ‘blueprint’, you can start this process now and begin taking steps and developing habits towards being financially wise (developing stability and being capable of financial growth). So here I highlight 5 key areas where you can start putting this into practice now!
1. Avoid Shiny Object Syndrome – Instant Gratification Rather Than A Bigger Payoff Later.
It can be so easy in the early stages to get distracted by ‘Shiny Objects’ other business opportunities, applications, software etc that distract you from the main business that you are creating. It does also refer to those who as soon as the first commissions/sales come through go out and buy a fast car or flat screen TV rather than initially investing back into the business to sustain and maintain growth.
Those who are wealthy are able to wait and grow their business to the point that they are generating sales and revenue consistently before they invest in other businesses or buy ‘stuff’ that are not assets (cars, tv’s etc). They are more able to deal with the process of growing a business they are able to wait initially knowing by doing this they will have a bigger payoff later.
They re-invest revenue in the business to grow for the long term. Whereas those distracted by the shiny objects, buy stuff and invest little to nothing back in the business so they then have to find money to grow the business and perpetually hold themselves in a space of having no money.
The wealthy have patience, foresight and this shows the ability to delay gratification (sustaining effort). By focusing on the business and avoiding distractions and re-investing into the business this will result in sustained and long term continual growth. Rather than unpredictable, stop start growth as finances become stretched resulting in a pause whilst new funds are found and the cycle repeats causing slow growth if any at all.
- Learn to Be Frugal, Even When It Isn’t a Necessity.
Millionaires know when to spend money and how to spend it wisely. Yes, they could by several new cars or the most expensive food, however they are aware that;
‘Just because they can does not mean they should!’
“Learn how to live within your means and how to delay gratification; these are the habits that you need to maintain on the way up, so you can keep your millions when you get there,” Adrian Cartwood, ‘How to Make 7 Million in 7 Years’.
In fact, reports have shown the preferred car of millionaires is ‘Ford’. Many would assume that it may be Porsche or Ferrari or some other luxury motor. The wealthy understand that new cars are negative assets, most people believe that a car is an investment. However, a new car once driven out of the dealership is only worth a fraction of what was paid (no return on investment). They would therefore rather invest their money into their business or specific asset plan that will grow their investment.
That’s probably not what most people imagine as their vehicle when they daydream about being rich, but it’s true nevertheless. Cadillacs and Lincolns are rated second and third, respectively. The reason for this is pretty simple: as an investment, vehicles have a poor return. Many wealthy people would rather invest their money into their own business or into a specific financial plan than spend it on a vehicle that will eventually need to be replaced.
Those that build their wealth for the long term understand about developing a frugal sensibility and spending money wisely.
3. Moving from Employee to Business Owner
As an employee, you have very little scope if at all in controlling your income. This is something that you will need to be in charge of if you want to have plenty of money. The vast majority of millionaires are business owners that are in charge of creating and maintaining their own incomes.
4. Mentors, Coaches and Getting the Right Education.
Having a high level formal education does not equal huge wealth. Many millionaires in fact dropped out of formal education. However, this is not to say that they do not value education. All millionaires understand the great value in finding the right teachers and education for their business.
They have no fear in investing in the best mentors that they can afford as long as they are achieving success in the area in which they are looking to achieve better results. They are always looking for the right training, courses, mentors and coaches that can take them to the ‘next level’. This type of education is vastly different to that offered in formal education settings.
5. Make Wise Investments
It is vitally important to learn the difference between positive and negative assets (liabilities). Many believe when
they buy a car that they are buying an asset, however once they drive the few meters out of the dealership the car is only worth a fraction of what it was before you drove it away. Clearly this is not ‘growing’ your investment therefore it is a liability not an asset.
The wealthy learn early even before they had amassed their millions that in order to become wealthy they needed to learn how to make their money ‘work’ for them. By investing in assets, they learned how to grow their wealth. Obviously, they start with their most important investment which is their own business.
Always invest back a portion of your cash flow back into your business, this is important to ensure its growth and long term success. Many millionaires had been surveyed by Legg Mason and on average they only kept 25% of their assets in cash the remaining were invested into their businesses and then other assets such as; equities, bonds, real estate, and other non-traditional investments.
Many believe that you cannot change these habits and practices until you have first made the money. However, this is backwards thinking. To be financially wealthy, you need to embrace these practices. Emulating how the rich manage their cash flow and money. This will start to have a positive effect on your financial decisions and over time assist you in achieving increased financial wealth.
So how and where do you get started? Simply when you are caught up in the excitement of buying that new gadget, business opportunity or product stop and take a while to question if you can put off the expenditure for a larger future pay off by focusing and putting consistent effort in your current business. Look at the areas you need to improve in your business and look for training and education given from experts in those areas. Get a mentor/coach to assist you to grow in your business, always seeking a mentor/coach that is already achieving the level of success you aspire to.
Ensure that you are re-investing back into your business and start looking at assets that will allow you to start the practice of building an asset portfolio. There are assets out there that do not require huge amounts of capital to get started and by getting into the habit of doing this at the start you build the foundations for maintain this as you build your wealth and can start investing larger sums of money.
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