First, A Definition Of Wealth

Category: Finance, Financial Planning.

First, a definition of wealth.

Those kinds of wealth are wonderful, definitely. I m not talking about a wealth of friends, or experiences, or interests. But right now, I m talking about money- lots of money. Wealth building, for the most part, involves four financial aspects: Growing a cash machine. Exactly what" lots of money" means is subjective, but let s say that when your annual income becomes your monthly income, you re playing in the wealth ballgame. Allocating assets.

Managing/ eliminating Debt. Spending planning. Growing a Cash Machine* This is the most important aspect of the wealth building foursome. You cash machine is an incorporated business, which is ideally based on leverage of your existing skill set. In fact, it is the foundation for the other three areas, whose sequence depends on the nature of your particular cash machine. For example, say you are an automobile mechanic.

How can you leverage your skills so that you have a business that makes money while you sleep? (The definition of a cash machine) . That s a service. Here s a scenario: People buying used cars come to your shop for inspection before they buy, and you realize that many of the things you check during your inspection, the consumer could easily check for themselves. Make them into an ebook, and voila, hire a marketer you have a cash machine. You teach a class at the community college and you package the hand- outs you ve created for the class. That s simplified, but you get the idea.

Think of something similar you could do with your skill set, and grow a cash machine. Wealth builders are generally entrepreneurs. Allocating Assets* With the income from your cash machine, plus all your other assets, create a comprehensive plan for your assets to work for you. You ll need advisors to set up an incorporated business for your tax strategy as well as asset protection. You ve heard the saying, "Stop working for money and get money working for you. " If you haven t already put a team together to grow your cash machine, with asset allocation a team becomes critical. And, you ll want a financial advisor to help create your overall plan.

Millionaires" hire" time. One of your most important assets to allocate is time. Invest in building yourself a team of experts and support personnel. Spending Planning* When the cash starts rolling in, a common mistake is to allow spending to keep pace with the increased income. In addition to expert advisors, housekeepers, hire bookkeepers, assistants, etc. This makes for a cushy lifestyle, but isn t part of a good wealth building plan. It doesn t need to be restrictive( like a budget) .

When you create your spending plan, it should reflect your personal priorities. Think of it more like a framework for financial decision- making that serves your long- term interests at the same time providing resources for you to enjoy the present. However, not all debt is bad. Managing/ Eliminating Debt* Once you ve got your cash machine going, turn your attention to arriving at zero consumer debt: credit cards, etc, mortgage. Sometimes, you want to leverage someone else s money. But for the most part, a focus on minimizing or eliminating debt is a sensible part of any wealth building plan.

Buying income real estate is an example of such a time. The ultimate goal of wealth building is financial freedom- when your passive income supports your lifestyle, and you work because you choose to, rather than because you have to. Use the wealth building foursome to lay the foundation of your financial freedom.

Read more...

This Is The Gut Check Buy/ Sell Decision Making Process - Finance and Financial Planning:

The recent events in the stock and bond markets drew everyone s attention.