When I was younger I felt that “the mind-set of wealth creation” was mere psycho-babble.
I simply believed that if you worked harder you would better off.
If you didn’t, you wouldn’t.
And that was that!
Now, I’m a little older, and hopefully a little wiser, I know that the psychology of wealth creation is of real importance in achieving success.
In fact, it’s vital.
It starts when you are born
Our internal beliefs concerning money and wealth were ingrained into our subconscious without us ever having realised it.
In this article, we were asked us to consider what happened to us when we were young.
What did our parents teach us about money…
“Get a good job? Work hard? Rich people are to be mistrusted?
“Money doesn’t grow on trees, you know! We’ll never be able to afford that!”
These are powerful messages being programmed into our subconscious.
It is important to remove your limiting beliefs about money if you want to build wealth.
Here are just 6 of the rules of the psychology of wealth creation which should be followed if wealth for the long term is your goal:
1 – Increasing your self-esteem
Why is self-esteem relevant to wealth creation?
The reason is because if your self-esteem is low and you then achieve a level of success that exceeds what you believe you are worth, you will unconsciously sabotage your success.
Yardney uses the analogy of a thermostat: each of us has a financial thermostat that is programmed to a certain level.
The temperature may fluctuate a little from time to time, but eventually we return to the level at which our thermostat is set.
A top consultant or specialist is comfortable with charging handsomely for his or her time because, in the words of the jarring L’Oreal ad, they believe ‘they’re worth it’.
It wouldn’t be possible without a commensurate level of self-esteem.
Share trading author and doyen Dr. Alexander Elder has always said that “failure is a curable disease”.
He believes that if we can understand and recognise our own potential to self-sabotage then we can re-train our brains to think more positively.
We can be cured of our propensity to make suboptimal decisions, he argues.
Further, Elder states, we will never be successful until we can remove this subconscious need to sabotage any outperformance of our expectations.
2 – It pays to invest for the long term
Too many of us devise plans to make ourselves a little better off in the short term, but have no cogent plan for building wealth over the long term.
True wealth and fortunes are built slowly but surely.
One oft-quoted example is that of the American Indians having sold the island of Manhattan to the Dutch leader Peter Minuit in 1626 for beads and trinkets worth just $24.
Historians naturally noted that the American Indians were dealt a raw deal.
Yet controversially, revisionists argued that had the $24 from the beads and trinkets been invested safely at a rate of return of 8% per annum, the unhindered compound growth would have ensured that the trinkets could today buy back Manhattan in its entirety, with all of its prime-location real estate…leaving a few hundred million dollars over as walking around money.
Food for thought!
Following the principle and power of compound growth is the key to building wealth.
If you can add some leverage – the use of other people’s time and other people’s money – you can join the ranks of the super-wealthy over time.
3 – Study and counsel with wise men
If you want to be successful, learn from successful people.
Find someone who has achieved what you want to achieve.
Study and follow their methods.
You may even be able to learn from some of their mistakes and reach your goals even more quickly and completely than they did themselves.
This is a powerful tool known as ‘modelling’.
I consciously use it every day.
4 – Pay yourself first
What do most of us do?
Pay our mortgage, pay our bills, pay our credit cards and pay for other essentials.
Then we look to see what is left over at the end of the month.
We need to see things another way.
Invest a decent sum safely away first and then worry about the other payments thereafter.
It sounds arrogant.
5 – Controlling expenditure
Financial freedom is about having passive income – which flows to you regardless of whether your work – that is greater than your outgoings.
There are two variables in that equation that can be adjusted to achieve the goal.
One is to increase the passive income figure (through investment).
The other is reducing the outgoings (through thrift).
Where are the holes in your financial foundations?
Where do you tend to spend big?
Holidaying in Honolulu?
Wasting at the Westfield?
Squandering at Star City?
How can you plug the gaps?
6 – Take action
It’s all very well studying these first five steps, but what really counts is taking massive and consistent action and simply never, ever giving up.
What is holding you back from starting today?
A fear of failure?
A fear of losing money?
You’re “doing OK” without investing?
When will you start to take action?
Next month, next year, next decade?
You need to dare to be different to achieve wealth.
Procrastination is the killer of all opportunity. Take action today!
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