Your Wealth Building Strategy

When you first start learning about personal financial planning topics, the amount of information can be overwhelming.

If you’re not careful, you can quickly find yourself paralyzed by too many ideas and too much information all at once.

Stop!

Breathe.

Relax.

This is fun!!! I promise!

Now, let me make it simple for you.

Your level of wealth will be dictated by what you do.

The good news about wealth building is that it’s mostly under your control.

The bad news about wealth building is that it’s mostly under your control.

The problem is simply that it’s hard to know where to begin with your planning. There are simply too many things that you could do. You need a framework for how to approach your wealth-building plan.

Your Framework For Wealth!

There are really only three things that you can control which will have an impact on your level of wealth:

1. Increase Income
2. Decrease Expenses
3. Invest Wisely

That’s it!

There is literally nothing else that you can change that will affect your financial wealth!

The good news is that you can change those three things with infinite variety and infinite creativity!

If you increase your income a little, decrease your expenses a little, and invest a little bit wisely, you’ll get some results slowly.

If you want to go hardcore and get massive results fast, you can increase your income a lot, decrease your expenses a lot, and invest really, really wisely and you’ll get much faster, much bigger results.

That choice is up to you.

Two More Layers

I do need to add two more things for you to consider. These two additional points are not anything specific that you can do but rather are ways of thinking which you need to adopt from time to time so that you can carefully stress-test your plan and make sure that you’re achieving your desired result as efficiently as possible.

4. Avoid Catastrophe

There are many, many things which can happen in life which can have a disruptive effect on your finances.
These things range from the ordinary (job loss, car breakdown or accident, sickness, etc.) to the extraordinary (your death or the death of your spouse, lawsuit, mass inflation of your home currency, etc.)

All of the potential risks should be considered carefully. Not all risks will affect you equally at all times.

For example, if you’re broke, don’t spend a lot of time worrying about how to protect yourself from a frivolous lawsuit; rather, make sure you have a plan if your car breaks down.

On the other hand, if you’re wealthy you don’t need to be too concerned about car problems or missing a week of work due to sickness but you should be very careful to plan for the threat of lawsuits and investment risks.

You need to think creatively and carefully about all the risks you face. Some risks can simply be ignored, some risks can be reduced with thought and action, some risks can be transferred, and some risks can be insured.

Just make sure you avoid catastrophe at every stage of your financial plan.

5. Optimize Everything

From time to time you should sit back and ask yourself if you’re earning, spending, and investing in the way that is most optimal for your specific circumstances.

For example, you may be able to earn the same amount of money at a job you love as you can at a job you hate. Although the financial effect on your cashflow each month will be similar, your quality of life will be dramatically different.

Similarly, you may have the same cost of rent living in two different cities but a dramatically different lifestyle. Even though the impact of the rent expense on your financial wealth will not be impacted by a move, your quality of life might increase dramatically.

Finally, don’t invest the way everyone else does if you have a method or plan of investing which is better suited to your personality. Invest in a way that is ideal for your circumstances and you’ll enjoy a higher peace of mind and you might enjoy better financial results.

Conclusion

That’s it! These are the five steps you need to take to build wealth.

1. Increase Income
2. Decrease Expenses
3. Invest Wisely
4. Avoid Catastrophe
5. Optimize Everything

But, understand that these are not things that you can do only one time. Rather, these things must be approached as a continual cycle. You must continually do each of these things throughout your lifetime.

You can also be infinitely creative in how you tackle each of these steps. Have fun with this and design the lifestyle of your dreams!

I recommend that you choose one step to focus on at a time. Choose one area, make improvements, and then move on to something else. Then, repeat diligently for the rest of your life!

You have an almost unlimited ability to increase your income. Find the best strategy for your knowledge, skills, ability, personality, and goals!

There are many, many ways to decrease your expenses. You can be gentle and gradual in your approach or hardcore and maniacal! Get creative!

Investing is not a form of impenetrable black magic. You’ve probably been investing most of your life in ways you didn’t recognize!

Think carefully about all of the risks that you face which could impact your financial plan. Then plan creatively to handle each one.

If you need to earn, spend and invest, why not do it in ways that suit your ideal lifestyle? Consider all of your options carefully and get creative!

Please understand that I will not be able to respond to every comment. RPF Community Guidelines.

12 Comments

  1. David Meyers

    Keep up the good work, Joshua!

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  2. Dave

    I have been listening to your show for a few weeks now, and I am very impressed with the level of expertise and professionalism that you bring to this craft. thanks for all you offer.

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  3. Kevin

    I love the show and have been listening for months. Keep it real and continue to speak from the heart. This is what separates you from the other personal finance podcasts I’ve tried.

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  4. donna

    Thanx. I am 58 financial fallout. Career loss. Trying to figure a change at 59…more income better career. A nurse. If I do not change course NOW it is not going to happen.

    Thanx again?!

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  5. Ed

    Your podcast is the best thing to happen to me this year. After all that money on advanced degrees, I get the most valuable lessons of my life through your free shows. Keep up the good work.

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  6. Ted Beck

    I have been listening to your podcast for a little while and have enjoyed them tremendously. Your five steps to build financial wealth has been very helpful in both my personal and professional life. One thought for a pod cast for you, unsure if you done an episode on this before, but it would be neat to hear about the various financial, planning, and mentoring resources available for U.S. Military men and women, both Active and Veterans. For examples, I’ve personally benefited from being able to use a VA backed mortgage. Additional, I’ve join a group that pairs up mentors and Military personnel to help with transition into civilian life. Check out http://www.acp-usa.org. Thanks for all your awesome work.

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  7. Marvin

    In your podcast, you always start the show with a comment about achieving financial independence in “10 years or less”.

    Where can I read or listen to more on the “10 Year” plan? I listened to most of your shows and I see how they all can help towards your financial independence, but I have not been able to understand where this “10 year” mark comes from.

    Thanks

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  8. Greg Provencher

    I would like to receive notification of new shows

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  9. Konstantin

    379 episode – another great show.
    I appreciate your honesty and look forward to future episodes!
    Would love to hear about bible’s teachings on money.

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  10. Wendy

    Just discovered your podcasts, love them, thanks!

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  11. George Miller

    Hey Joshua, just wanted to say thanks. I’ve avoided budgeting for 15+ years and through stumbling across your podcast on Spotify, I’ve begun budgeting and feeling good about it.

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