The Key to Being Rich…

Being “Rich” is different from person to person, it actually could mean jet-skiing in Boracay for one person and could mean simply owning your own home for the next.

No matter what it is that you think of as “Rich,” no matter what dream you have, as long as it is your dream and yours alone, you will be able to achieve it. The key to getting there is not just living in the moment, but living in both the moment and in the future.

To be able to attain the level of “Riches” that you want, you need to do what I have come to phrase as FORWARD-THINKING SPENDING.

Simply put, all it means is your ability to plan for the life you want to lead, which comes down to understanding where you are now (Current Situation) and where you want to go (The Life You Want To Live).

In fact, when I was a Personal Trainer and gym owner, it would be exactly the same process, because achieving goals boils down to the same thing, no matter what it is that you want in life.

Whether “Rich” simply means being healthier to you, or maybe you want more money, maybe it is that you want a relationship with someone. Whatever “Rich” is, you have to go through the same process, you have to understand your Current Situation and then make small incremental changes to move towards The Life You Want To Live!

Let’s bring it back to finance for a second, you need to get honest about your current situation, truly look at the numbers and understand the ins and outs of your life.

To do this, you need to make your cashflow as simple as possible, that way you can keep track of your spending. Therefore, if you have more than four to six bank accounts, you need to whittle that down this week!

An example of this is how my wife and I currently use four bank accounts, we have our main bank account and savings account, this is where all our income go into, we pay our bills and rent from.

We then have an individual account each, which are our “business” accounts, as we have both been sole traders in the past. However, I am a firm believer that having an individual transaction account in a relationship is actually really important, so you can maintain some form of individuality and so you can buy that gift for your partner without them figuring out what it is.

We also have a savings account linked to each transaction account, however these savings account are used for tax purposes for our business accounts. Therefore, if you do not run a business, you would not need these accounts. Hence why having four accounts is more than enough if you are in a relationship, if not, no more than three is truly necessary.

An example of your account structure if you have a mortgage would be similar, however you would obviously have the mortgage account on top of that, so five accounts as a maximum.

**When running a business, you need to try to keep personal and business separate, which can be tricky if you are a sole trader. The best question to ask when purchasing from your business account would be is, “Is this purchase for the business, or myself?”

Generally, this just makes life easier at tax time, but if you are like me, sometimes you can’t help yourself to make personal purchases with the “business account.”

Now, let’s get back to The Key To Being Rich…

Now you have made your cashflow simple and efficient, you need to KNOW your Current Situation!

Doing this requires some homework and looking through your bank accounts over the last three to six months. Which sounds difficult, but it really is not, because plainly put, they are just numbers on a screen.

No matter how embarrassed you may be, or ashamed at yourself, you have to remember that it is in the past and we cannot change the past. We can only learn from it and grow stronger for it.

Once you have gone through your accounts and turned over every stone to see what is underneath, we can now start to look to the future.

The future can be super unclear and murky, even scary if you have no clarity over your current situation, it might seem impossible…

However, I believe that you are closer than you think to the future you strive for, it just takes a little bit of stepping back, evaluating your situation with a clear mind and coming up with some small changes to move towards being (Forward-Thinking Spending) “Rich.”

Much like health, if you want to increase size, you need to understand that it means eating more and using resistance training to improve your muscle mass.

If you want to have more savings, you need to have a look at your spending and income, work out the difference and see whether you have anything left over. If you do not, you know you need to cut back on spending, or earn more income.

You see, the Key To Being Rich is simpler than you think…

I never said it was easy, however, it is simple. All it entails is spending less than you earn, so you can put money away into savings and investments, and delay gratification enough so that you slowly but surely get closer to your version of “Rich” each year.

Of course, if you are unable to reduce spending, you can earn more money, you just need to be open-minded to the ways you could do this…

• Ask for a pay rise

• Start a “Side-Hustle”

• Sell stuff that you do not use

• Move jobs that pays better

• Get another job

• Invest in income paying assets

As you can see, there are multiple ways you can earn more money, you just need to know what is going to work best for you if you are unable to spend less money.

Forward-Thinking Spending is the key to being “Rich,” and it is based on your priorities, values and whether you believe that you can get to where you want to go.

All you need to do is put in a little bit of work at the start to simplify your cashflow, know where you are currently and understand what the numbers are to get where you want to go.

Which is the last aspect I will talk to today, understanding the numbers of your version of “Rich.”

No matter what it is, you need to know how much you need to save to get to where you want to go.

Do you want to live off passive income and dividends (the profits paid to shareholders of a company) without having to work?

You will need to know your expenses first and know how much you need each year to live, this will give you your dividend figure needed. Which in turn, will give you the amount you need invested in an asset to get the dividends.

Do you want to own your first home?

You will need to know how much you can afford based on your salary/income, your current deposit that you have etc.

Do you want to go on a holiday? you will need to know how much your holiday will be, so that you can create a savings plan.

Do you want to start a business and make it a $1 million per annum business?

You will need to create a business plan and know the ins and outs of the industry… Plus understand the capital (money) and personnel needed to start up the business.

You see, no matter what version of “Rich” you want to achieve, it is possible, because it has been done by someone before you. Unless you are Elon Musk, who wants to create a civilisation on Mars, you can reach out to others who have done it before you to understand what you need to do and save to get there.

All it takes is a little bit of thinking, a little bit of time and you will be well and truly on your way to being “Rich.”

Until next time,

Take Back Control