25 Jul Unlocking the Keys to Wealth Building (Part 2)
Are you ready to unlock the keys to wealth building? Are you ready to reach your first X? I have been sharing with you what I call The Triple X Factor which is basically the BIG picture of wealth building. Last week, I broke down the Triple X Factor and we discussed the First X. I had you evaluate where you were at financially by plotting your income and expenses. Continue to plot your income and expenses for a few months so that you can truly EVALUATE your financial picture. If you missed last week’s blog, go back and read it so you can get started in wealth building.
The First X is where the First X Income (earned income) and expenses meet. Most people in the U.S. live right around the First X. They live out of their job. They work to make money to pay expenses. The first goal in the Triple X Factor is to increase our First X Income and decrease our expenses. So, how do we do that? Today I want to share with you 4 Steps to Reaching Your First X.
Step 1: Become More Valuable
The most important way to become more valuable is to invest in yourself. We get paid for our value not our time. Your company pays your salary because you hold a valuable position in the company, not because you show up from 8-5. Your time might be a part of that value, but it is not the entirety. There are 3 main ways to invest in yourself. First, learn something new. Take a class, read a book, or find a blogger to follow. Anything that plants information in your mind and heart will give you more value. Second, listen to someone who you think is successful. Ask that person how they got to where they are and take notes on their answers. Last, look for someone to model after. Find a mentor to observe and imitate. The more you invest in yourself, the more value you will bring to the marketplace. I wrote a blog recently about these 3 actions for investing in yourself. Check out that blog for more details.
Step 2: Learn to Live on 80%
So, how does this work? Well, the 80% goes to your expenses. Then, you tithe 10%, put 5% with someone who can professionally invest the money, and then you personally invest the other 5%. Find ways to bring in extra income by learning how to personally invest that 5%. This could be a Mary Kay business, an Etsy shop, or flipping garage sale items. When you learn to live on 80%, you are practicing mastering your money. It is difficult to set aside those funds when you have been used to spending them. It take self-control and discipline. When you learn those things, then you will be in a stronger position to start building wealth. Once you learn how to live on 80%, the next challenge is to learn how to live on 70%.
Step 3: Know the Difference Between an Asset and a Liability
It is important to learn the difference between assets and liabilities in order to carefully manage your 80%. Liabilities are things like cars, jewelry and TV’s. They depreciate in value after you buy them. It is an expense that does not pay you back. Assets are completely different. They are things like real estate, stocks, and businesses. They appreciate in value after you buy them and bring money to you. The idea is that as your assets are bringing in money, you can use those assets to pay your expenses and liabilities.
Step 4: Eliminate Debt
Debt elimination is important because so many people in the U.S. are shackled to debt. Debt prevents us from building wealth. By simply reversing the direction of your money, and investing it instead of spending it, you can end up in a really healthy place down the road. So, look for a debt elimination program that works for you. There are a lot of them out there. If you need help finding one, check out my book Money Mastery. Among all the information in the book, there is a section on debt elimination—9 steps to getting out of debt.
We can’t stop at eliminating debt. That’s only the first of the three X’s. We must continue to move ourselves into a position to acquire assets and build wealth. I want to challenge you to work hard on the First X. From there, you can position yourself strongly to build the Second X.
What can you do today to help move you towards mastering the First X?