The True Determinants Of Building Wealth

Elite Formal Education is Overrated

 

There is a huge myth that going to a great school and getting a great job will help you build wealth. In reality, it’s more likely to bury you in so much debt that you’ll be close to retirement by the time you’re debt free. When I graduated from college (we won’t say exactly how long ago that was!), I had friends that had already accumulated about U.S. $80,000 in debt. And for some of those friends that went to med school or law school at my alma mater, they tacked on another $100,000 of debt, for a total burden of close to $200,000.

 

In today’s dollars, that debt would perhaps be more than $325,000. So in the first year after completing their formal education, some of my friends already had a minimum $2,000 to $5,000 monthly payment that came off the top of every paycheck. Any way you slice it, this is an enormous abyss with which to start your journey of life.

 

I know that many people will have a difficult time believing my next statement, but an examination of history will support my next assertion. The great expense tied to elite institutions serves two purposes. (1) To provide a network/structure by which the moneyed elites can retain power; and (2) To burden the non-wealthy with enormous debt. In the seminal book Education and the Rise of the Corporate State, Joel Spring wrote that ‘the development of a factory-like system in the nineteenth-century classroom was not accidental’. Russell Conwell, a member of the wealthy elite and founder of one of America’s oldest educational institutions, Temple University, voiced sentiments he believed should be integrated into education:

 

‘The men who get rich may be the most honest men you find in the community...Ninety-eight out of one hundred of the rich men in America are honest. That is why they are rich. That is why they are trusted with our money...It is because they are honest men....the number of poor who are to be sympathized with is very small. To sympathize with a man whom God has punished for his sins....is to do wrong.’

 

Elite Jobs that Build Wealth are Rare

 

In essence, elite education builds a caste system financed by debt. There are two predominant scenarios which students of elite educations face upon graduation. There are those that emerge from these schools debt-free and really didn’t need the advantage of an elite education anyway, and those whom are burdened with debt and will become cogs in the machine for the interests of the debt-free. For those that believe that they can dig their way out of this huge mountain of debt by working their way up the corporate ladder in the land of opportunity, think again. In 1965, CEO’s in America earned about 24 times as much as their employees. In 2006, CEO’s in America earned 262 times as much as their employees (Source: BBC News, June 22, 2006).

 

Furthermore, in 2005 and 2006, CEO’s from the 11 largest U.S. firms collected U.S. $865,000,000 in salary at the same time their leadership caused shareholders to lose U.S. $64,000,000,000 in company stock. Whether or not their leadership destroyed billions of dollars of wealth in the stock market was irrelevant. They were still rewarded. Such is how the modern-day caste system works.

 

Unless you will be studying engineering, law, architecture, or medicine, most formal education is not only irrelevant to building wealth, but you are certain to build it much more quickly if you become an entrepreneur and/or learn to invest properly. My opinion on formal education will only change when the majority of schools begin teaching what is truly necessary to succeed financially later in life. And that includes classes on:

 

(1) Investing in stock and non-stock assets

(2) Leveraging money

(3) Leveraging time; and

(4) Building successful networks (it’s not what you know, it’s who you know)

 

As it stands now, one can go to Harvard or Oxford, earn a doctorate, and still be ill- prepared to build wealth. Undoubtedly, the network that one builds at these types of institutions is exponentially more valuable than the education one receives.

 

Saving Money = Losing Money

 

Perhaps an even worse piece of advice is to save and put money away. Putting money away into a savings account and letting it sit there at the 1% or so interest rate that banks give these days just turns your money into dust. Consider that $1,000 in 1980 can only buy less than $500 worth of stuff in 2006 dollars, and it’s easy to see that ‘saving’ your money only loses you money. There are almost always good risk-reward investment opportunities somewhere in the world, not just stock markets. If real estate opportunities in Korea are poor, then Argentina or Iceland may be booming. It’s just a matter of widening perspectives to find them. Having idle cash sitting around and not working for you is never a good strategy when one desires to build wealth.

 

Want to find the land of opportunity? Go look in a mirror and you will have found it.

 

The Threshold Between Wealth Creation & Destruction

Wealth is simply the accumulation of money, and it can only be created by the amount of money that is received and never spent. If you want to build wealth, then anytime you receive money: don’t spend all of it. Sure it is a very simple concept, but it is very difficult to continually achieve. Luckily there are readily available allies to help you: find some compelling reasons to start saving, build it into a habit, watch the results of your efforts build, and set some financial milestones to reward yourself.

 

Setting aside a percentage of any money that you receive is the best method to follow through and build the habit of saving money. There are a few misers among us who find saving easy to do, but most people want to spend far more than is earned; let alone have the discipline of spending less than what they earn. So it starts as an uphill mental and emotional battle that gets easier by following through with the habit, and seeing the results of your effort. Spending less than what you earn every week, every month, every year, is the only way to amass money.

 

How much money should you set aside to build up savings? It should be a percentage so that you automatically move it into a separate savings account anytime you receive income, without exception. It is my experience that the range of 3% to 10% is the most successful starting percentage for people who continue saving over long periods of time. Saving only 3% is so small that it is nearly painless to even the lowest income earners (this is actually where I began years ago). Selecting a percentage under 3% accumulates to such a tiny amount of savings that I haven’t heard of anyone sticking with it. And starting out by setting aside over 10% is too painful for even high income earners to withstand, because they are so accustomed to spending on every whim. As you repeatedly save a set percentage rate, it will become more habitual, automatic and expected. Then you’ll be ready to increase your percentage rate. And the higher the savings rate, your growing pile of money will create more motivation to continue to save. This summer, I spoke with a successful saver who lives very well on only 30% of his income. Because he saved diligently to continually buy rental homes, after a couple decades he earns over a million a year in rental income by Ashville, North Carolina.

 

In the fragile first years of saving money, it can take only a single wrong financial move to wipe out everything that you’ve saved so far. And the most common wrong move doesn’t look like it when it is occurring. This draining move can also start insidiously small and build a different habit, the wealth-destruction habit. You know the problem: pay your credit card balance in its entirety, every month, without exception. As an example, if you haven’t saved money for a vacation before you depart, and then charge it all to your credit card, there is a giant probability that you won’t pay it off for a very long time. The credit card companies know this and they are extracting interest dollars from you instead of earning interest yourself. You’ve shifted to the dark side of wealth destruction where it is more common for your credit card balance to grow than shrink.

 

Let’s get back to building your wealth. Once you start setting aside the savings percentage that you’ve decided and opened a dedicated savings account, you need to closely review your account statements for motivation. Reviewing the progress that you’ve made so far you’ll see how you are moving toward financial goals can be self-reinforcing. And another motivator is rewarding yourself by spending some money on yourself when you’ve reached certain milestones. For example, you could start with a goal of accruing $500, and reward yourself with something meaningful; and then each time you double your amount of savings you get another reward. My advice is to at least begin with a savings percentage, even as small as my 3%, and allow this simple concept be of great financial benefit to you.

 

The Path To True Wealth

Many people believe that the path to true wealth begins with a huge money making opportunity. This is only partly true. While a good wealth building opportunity does come up from time to time, they are actually few and far between. Most of the people who attain true wealth are those that budget wisely, work hard, and do not live as if they were wealthy.

 

The path to true wealth begins with determination. When you are determined to amass wealth, you will be successful, even if it does not happen right away. Determination spurs will power, hard work, and pinching pennies. However, determination is not enough.

 

The next step on the path to true wealth is making a plan. The chances of finding that get rich quick scheme that everyone talks about making millions from are pretty slim. You need to make a plan for a profitable career path, business, or money making opportunity. You also need to make a plan for investment.

 

True wealth is about budgeting and investing. Do not spend all of the money that you earn. Save some back until you have enough to invest. This is actually easier than it sounds. When you have reached a lifestyle that is comfortable but not excessive, stop increasing your lifestyle. Instead, sock the money away into a savings account or money market account until you have enough to invest and try to amass true wealth.

 

You might invest in low risk, high return investments such as money market accounts, or you might invest in stocks or commodities. Investing in new and upcoming companies that are very promising, sometimes called penny stocks, is one of the best ways to invest your money and accumulate true wealth quickly. Investing the money that you do not spend is the best way to accumulate true wealth.

 

This is a perfect example of how to amass true wealth. One man started out working in a rock quarry. He moved his way up into management, then into executive management. In the early eighties, the man invested almost ten thousand dollars in savings into penny stocks in a company that many thought would never float. Later, he was a millionaire when Cellular One took off like a rocket. He took the money, reinvested it, and made yet more money. Still, the man only lived in a house just big enough for his large family. When he finally passed away, he had over one million dollars to be divided among his family, and he had not worked in twenty years.

 

The Automatic Wealth Building Habit

Can you really build wealth automatically?

 

The answer is yes...you just need to acquire a new wealth building habit.

 

You are going to love this habit because you do not even have to remember it....a banking computer remembers the habit for you! How is that possible? Read on and you will soon see.

 

Here is how the automatic wealth building habit works. It is based on the miracle of compounding interest and the amazing banking technology that is available to virtually all of us today.

 

Step 1

 

If you do not have a bank account with "Bill Pay" go to a bank that has it and open a new account. Ask them how many checks can be sent per month, can it be managed via the internet, what are the costs. Many banks now offer this service for free as a promotion to get more customers.

 

Step 2

 

Decide who it is that you want to help build wealth. Yourself, your child, a grandchild, or even a friend. This habit also works for building spiritual wealth...more on that later.

 

Step 3

 

After you open the account you now have the ability to select any amount of money that you want sent to any person or organization and at almost any time interval. Some banks even offer an unlimited amount of bills that can be sent. The banks will then mail checks at regular intervals to the people or organizations you have designated...you do not have to do anything.

 

The real power of this habit is that you are not going to be sending bills in most cases...you will be sending wealth building payments....automatically!

 

OK, before we get to step 4 let's look at the amazing power of compounding interest to see how much wealth can be built over time with this habit.

 

Here is an example of how much wealth you could build by having your billpay send just $50 per month into an account (mutual fund, IRA, etc) that has a 5% yield.

 

1 Year = $615

5 Years = $3,400

10 Years = $7,764

25 years = $29,775

 

You can learn more about compounding interest by doing a Google search on the internet. Obviously the amount of wealth you can build varies with the amounts and frequency of bill payments sent to your wealth building accounts and your rate of interest.

 

This is where research can help you, it is beyond the scope of this article to show you all the amazing possibilities that exist.

 

The beauty of the bill pay system is that it is very easy to adjust your recurring amounts up or down based on your current financial situation. As an example, you could set up your bill pay to send $12.50 each week into an account (Equals $50 per month) or change it to $15 per week for a few weeks and then back down to $12.50 at a later time. You decide exactly who gets the money, how much, and how often....you have complete control at all times. It is amazing wealth building power.

 

Step 4

 

Now it is time to set up your automatic wealth building habit using your bank’s billpay system. Get the address of the person or organization you want the money sent to including the account number. Go online and set up a new account with this information. Set frequency and amounts. Note: I have been doing this since 1992 and have multiple accounts (Charities, IRA's etc) that have received money from me every month for 14 years and I have never written or signed a single check! I know from personal experience that the system works and I have never had any problems.

 

You can get very creative with how you build wealth and who you help build wealth.

 

• Set up an automatic bill pay to fund a child’s college education. There are many states that have plans that start with low monthly fees when the child is born or still young.

• Set up an automatic bill pay to fund a child’s savings account, just have the money be sent to the child’s bank with their account number listed on the check memo "Deposit to account ######"

• Set up an automatic bill pay to send a charity a payment every week. Remember that I said earlier that this habit can help you build spiritual wealth? If your church receives an automatic charity payment every week you are helping to support your church every week, even when you miss a Sunday service.

• Set up an automatic bill pay to send money to someone in need.

• Set up your bill pay to actually pay bills that you have paid late in the past....you may be able to save enough in prevented late fees to fund your wealth building payments!

 

The possibilities are endless.....you just need to take action and make it happen!

 

The 5 Unbreakable Laws Of Online Wealth Building

When the internet first started, few could ever imagine how far reaching it’s effects will be more than a decade down the line. It’s a fact of life now that the internet will continue to change virtually every aspect of our everyday life. As the world’s internet population keeps expanding, so does the opportunities for entrepreneurs and ordinary folk looking to escape the slavery of a nine to five job.

 

Online wealth building is for everyone. The sheer amount of opportunities presented online enables anybody to start building wealth online. There are just so many areas to explore and regardless of your level of talent, skill or interest, you will find something that suits you. Someone once said that ‘you can turn any passion into profit online’ and this is more true now than ever before. It seems like the biggest problem is not in finding a suitable program, but rather in not getting distracted by all the various options that we get bombarded with. Every single day new opportunities open up and it’s our natural tendency to get in on the action. Online wealth building however relies on focus and having the discipline to not get distracted.

 

If you are committed to building your wealth online it holds many obvious advantages. The freedom to work on your own clock and answering only to yourself are the main reasons why so many make the shift from the office to the spare room at home. Many online wealth building programs create false illusions that leave many aspiring newbies out in the cold after investing their valuable time and money. The internet is a tough world when it comes to making a living, but then again so is it out there in the ‘real’ world. Don’t expect an easy ride, but don’t be put off either. There are just so many opportunities online that you are bound to find your place sooner rather than later.

 

I would like to offer you what I consider to be the five laws of online wealth building, that can help you greatly towards creating long term success online. I would encourage you to use these laws to evaluate potential opportunities or just to evaluate your current position.

 

The Law Of Excellence:

 

Things tend to move really fast online. It is critical that you commit yourself to excellence and to always keep learning and improving. If you don’t you will most certainly fall behind. Strive for excellence. You can’t keep doing the same things and expect to improve, nor does doing more of what doesn’t work won’t make it work any better.

 

The Law Of Quality:

 

I like the term ‘wealth building’ because it implies that it’s not some instantaneous thing. Quality always gets rewarded long term and although some of the ‘get rich quick’ schemes online work, they rarely work long term. There is a big difference between making a quick buck and building wealth. Whatever you create online, strive for quality first as this will ensure sustainability in what you do.

 

The Law Of Choice:

 

Wealth is a choice. You’ve probably heard this before, but never really understood it completely. Being wealthy starts with a choice and it’s a choice you have to make daily. The internet is responsible for the largest distribution on wealth in history. The power is shifting from the big corporations to the guy (or girl) in his garage with a single laptop. You can choose to be part of this or to keep doing what you’ve always done.

 

The Law Of Persistence:

 

When it comes to online wealth building, for some the learning curve will be greater than for others. Regardless of your skill level you will face many challenges and often consider packing it in. This is where persistence and perseverance comes in. Realize that you will always meet with much difficulty before you succeed - it’s essential for your personal growth and developing to a level of success.

 

The Law Of Value:

 

Whatever you do online, be a team player! I cannot overemphasize that enough. Your wealth and success is directly proportional to the amount of value that you add to other people. If you want to be more successful, just think of how you can add more value to other people’s lives.

 

Financial success is most certainly obtainable for virtually anybody. There is however a big difference between obtainable success and sustainable success. Just think back at the story of The Three Little Pigs - you want to build your ‘house’ from brick and make sure that your success is sustainable long term. After all, who wants to quit their day job only to go back after six months?