February 16th, 2010 | 
Author: Is Accumulating A 1000000 Net Worth Easy? Yes And NO
Is accumulating wealth as easy as following a 3step plan? Yes it is and no it isn’t. As with many things in life accomplishing a goal such as accumulating one million dollars (or even 100000) depends on your desire your personal choices and your daily actions.
Let’s start with one example on how you might miss this goal. One of the first components of successfully meeting any goal is to have the desire (or a compelling reason). You’ve probably thought about losing weight running a marathon or accumulating a great deal of wealth. However the ‘want’ ‘wish’ ‘dream’ or ‘thought’ is often not enough to propel you to take continuing action steps to successfully attain your goals. Even if you take the first action step your ability to sustain enough motivation to meet your goal may soon disappear after a few months or possibly after a few days. Until you create and internalize a ‘compelling reason’ (true desire) to meet a specific goal it will be difficult to meet your goal. You have to make this desire a ‘musthave’ instead of just a ‘want’; you need a compelling reason to meet your goal. You need to create a true desire.
The simple part of accumulating wealth is many people have already succeeded in meeting their wealth accumulation goals. I have personally accomplished my net worth goals on two separate occasions and in 3 years I expect to reach my next net worth goal. I started with a net worth of a negative 10000 mostly consisting of personal credit card debt. Meeting my net worth goal wasn’t easy; but I created a compelling reason made some personal financial choices took specific daily actions to make these goals. Many other people from all walks of life with all types of educational backgrounds are also very successful in meeting their net worth goals. Since it has been done many times before setting and making your own personal wealth accumulation goal can be very attainable.
Let’s say you determined that accumulating a 100000 net worth is one of your personal goals. If you’ve created a compelling reason (a true desire) then you’re ready to proceed forward to accumulating 100000 and probably much more. If you’ve not made it a ‘must’ goal and you are still only dreaming about accumulating 100000 then you’re not ready to start. You’re not ready to take the second action step. This first step is critical you must have a “compelling reason” to make your goal.
Anthony Robbins has made a living by proving that success starts with a strong desire. Check out a product review of his latest Get the Edge program at www.yourkeytosuccess.com.
Ok let’s say you have now created your own personal compelling reason to attain your goal. You’re ready to get started with the second action step. What are the key elements in meeting your wealthaccumulating goal?
1. Your income must exceed your expenses
2. You will invest your excess funds
3. You will be patient and let the magic of compounding work
1. Your income must exceed your expenses: This is a simple mathematical statement. However for many people this is the most difficult step to overcome on a consistent basis. It is all about your choices. If your income does not exceed your expenses you have to make a choice. You will need to cut your expenses increase your income or if you are really ambitious and have that ‘compelling reason’ to accumulate wealth you’ll choose to do both. In my personal situation I focused about 70 of my energy on cutting expenses 30 on increasing my income. I decided to spend less on clothing entertainment dining out and I also cut coupons to help reduce grocery bills. I decided to live within my personal financial situation. I decided to spend less than I earned. Remember you have a choice.
A. Do you have a compelling reason discipline to accumulate wealth?
OR
B. Do you lack the discipline and have an immediate gratification need so strong that to satisfy your need you need to purchase the newest fashion go to all the home football games dine out 4 nights a week etc? It’s all about choice.
2. The second step to accumulating wealth is to invest your excess funds. You need to invest your excess funds to meet your personal financial goals. Investments can range from real estate stocks bonds CDs or possibly investing in a small business. Whichever route you choose create a systematic approach to investing change direction if necessary but don’t stop. Investment diversification is important to help ensure that you can ride through the normal upanddown cycles of the stock market or the real estate market. Personally I started with investing in a 401K then stocks and bonds and eventually real estate. While other young people decided to spend all their weekly paycheck I made a choice to first put a few dollars away each week into a 401K and other investment vehicles. I ‘paid myself’ first and then I spent money on the other entertainment activities. See some of the investing books at the end of this article.
3. The last step is the magic of compounding. You’ll often hear the phrase “The rich get richer.” While this phrase can mean different things in different situations; in the context of compounding it has a major impact. Let me share a few examples on how you can accumulate 1000000 based on average investment return of 10 (stock market average).
Let’s say you are 40 years old and you have 20000 to invest. To accumulate 1000000 by the age of 65 you would need to contribute 567 per month.
If you’re 30 and have 5000 to invest you’ll need 218 per month to reach 1000000 by age 65.
Let’s say you are only 20 years old and you have no money to invest. You can start with absolutely 0 and still only have to add 94 per month to reach that same 1000000 goal by age 65.
Wealthy individuals understand the benefits of compounding. Here are examples that show how the rich get richer.
A. If you have accumulated 10000 and your investments yield a fantastic 20 you will have earned 2000 for that year.
B. If you have accumulated 100000 and your investments don’t do as well and you only earn 10 you still outpace the person with only 10000 and you’ll earn 10000 for the year.
C. OK let’s say you met your goal of accumulating 1000000 and your investments do even worse at 3 for the year. You will still make over 30000 for the year. If your investments performed well (10) you will have made an unbelievable 100000 for that year.
There it is. The 3step plan for meeting your own personal wealth accumulation plan. Whether it’s 100000 or 1000000; you have the potential to attain your personal wealth accumulation goal as long as you have a compelling reason (a true desire) you make the right personal choices and you take daily actions towards this goal.
Is it easy? Not necessarily
Is it possible? Absolutely yes!
Take Action Today!!
First set aside 30 minutes or 3 days and create a compelling reason to set your own personal net worth goal.
Then set a specific net worth goal for 3 months 1 year 5 years and 10 years. Not sure what your goal should be. It doesn’t matter right now. Just set a goal and change it as needed you’ll probably change it upward.
Next take 10 out of your wallet or purse TODAY and deposit it into your new “Wealth Accumulation” account. You’ve just now taken the first steps and are now on your way to meeting your goal. You’ll be amazed at what you can accomplish!
To start your wealth building education there are many great books on the specific subject of accumulating wealth and you can search your local library as an inexpensive and resourceful first action step. In addition check out some of these titles listed below. You can find these titles and many more online at Amazon.com BooksaMillion or Barnes Noble.
The Automatic Millionaire The Finish Rich Workbook Smart Couples Finish Rich Smart Women Finish Rich by David Bach
Multiple Streams of Income Creating Wealth One Minute Millionaire by Robert Allen
Rich Dad Poor Dad Rich Dads Guide to Investing Own Your Own Corporation Rich Dads Retire Young Retire Rich Real Estate Riches by Robert Kiyosaki
The Laws of Money 9 Steps to Financial Freedom The Road to Wealth The Courage to be Rich by Suze Orman
The Truth about Money Ordinary People Extraordinary Wealth by Ric Edelman
Secrets of Six Figure Women by Barbara Stanny
The Savage Truth on Money by Terry Savage
The Only Investment Guide You’ll Ever Need by Andrew Tobias
The Millionaire Next Door The Millionaire Mind by Thomas Stanley
The Intelligent Investor by Benjamin Graham
About the writer:
Mike Matthews is a writer with many personal successes in the areas of small business personal finance real estate investments and reaching fitness goals. He writes informative articles and conducts honest product reviews with a focus on the four main areas outlined above. His articles product reviews can be found online at http://www.YourKeytoSuccess.com. His book on ‘Taking Action Your Key to Success’ is due out in 2005.
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