Aug 9, 2019
The Speed of Wealth Part I
Some people get wealthy. Some people get wealthy fast. Some take longer. And others never get there at all. We studied the characteristics of the top 1% of wealth and have identified their financial behaviors compared to the rest of the pack. You would be amazed at what we found.
Before I go into the differences I want to clarify, that when I say “wealth”, there are several definitions of that word. The definition I am using right now is a life of abundance and prosperity in all areas that is completed financially funded by real, cash flowing assets. To the degree that a person no longer needs to trade time for money and can now treat money like oxygen. That is wealth.
Now back to our topic. You’ve seen what I am talking about. Some guy like Jeff Bezos comes “out of the blue” and is all the sudden the richest man in the world. Then there are others who take longer or really never make it happen. Today I am going to show you the difference in financial behavior that separates those who have total economic freedom in their lives vs. those who do not.
This is Part I and we will be comparing income habits and expenditure habits.
I’ll preface this with 2 quotes:
“If you income does not exceed your outgo, then your upkeep will be your downfall.” — Bob Duggen
“Always earn more than you spend…and always earn a lot!” — Chris Elder (a personal friend of mine)
The first thing I want to do is compare how the wealthy earn their income streams. The average millionaire has at least 7 income streams. Now I’m not saying that millionaire means wealth, but I am saying that shows you a starting point. An income stream is a source or flow that produces income. You need many of them and they all need to be aligned with and feed off of each other. Now if we compare to those who build slow or no wealth, they don’t have enough income streams and the ones they have conflict with each other. Have you ever seen the realtor who also sells vitamins with an MLM part time? That’s a conflicting income stream. If you’re a realtor, start with buyers, then sellers, then recruit agents and admin, then refer leads to centers of influence in the home buying process for a commission, then open the agency, and the brokerage and move into mortgage and title. That’s congruent. Homes and overpriced vitamins aren’t. If you want to build wealth faster you need to commit to a main income source, get rid of all distractions, and only add income sources that feed the first one.
The wealthy also save 40% of their gross income. Off the top. This means before they pay the bills, they take 40% of their pre tax income out and pay themselves first. This money is later invested to add more passive income streams. Those who have slow or no wealth save what is left over. They get paid, they pay everyone else, the splurge and have fun, and then try to hang on to the few pennies left over until their next paycheck. You might think this sounds like middle or lower class financial behavior, but you’d be surprised at how many millionaires I know who do the same thing. They’ll pay their travel agent before they will pay themselves. It makes no sense. If you want to build wealth faster, you need to save 40% of your gross income FIRST and survive off of what is left over.
Next income trait is that the wealthy make more money than they “need”. They aren’t working, earning, and building wealth for their own personal needs. They believe that is selfish thinking. They already know they’ll take care of themselves. They are focused on their kids, grandkids, family, church, community, employees, and the world around them. They are doing this because they want to produce something before they leave this world. Not spend all their time gorging and consuming everything they can to stay comfortable. Those who have slow or no wealth stop trying to earn income when they feel content. They’re selfish and don’t even realize it. They only need $80,000 per year to pay bills and go to a beach somewhere once a year to drink themselves for 10 days so that is all they do. Their mindset is focused on how comfortable they can make themselves and how much they can consume for their own pleasure. Their retort to mega wealth is “I don’t need all that”. Which is apparent in their actions because they are thinking only of their own needs with the way they earn their income. If you want to build wealth faster, you need to set HIGH income targets that go far beyond just your own personal needs.
Let’s move on to expenditures and investments.
The wealthy spend their money for time, more income, and taxes. They realize how valuable time is and so they are willing to trade money to get more time. They also know they need to always be earning more so they spend money on things that will increase income. The wealthy also believe they can do a better job distributing their money than the government can so they spend on things that will reduce their tax liabilities. Now let’s take a look at the other side of the coin. Those who have slow or no wealth spend the majority of their money for personal comfort. Sure maybe they put some money in their 401k or try to pay the house off early. But other than that it’s food, alcohol, trips, and other personal comforts. They make it seem like they have a spiritual outlook on needing to enjoy life instead of just working and thinking about money. But really, they’re just seeking after personal comfort because they’re bored or distracted. If you want to build wealth faster, you need to hold off on the comfort expenditures until you’ve hit your wealth target and until then, everything goes towards time, more income, and tax reduction.
Additionally, the wealthy put as much money as possible to investing. They have Sacred Accounts and also store money in gold and silver bullion because they understand cash is worthless. They don’t want to hoard and cling to something that is worthless. Those who have slow or no wealth put a much money as possible to consumer expenses and investing is an afterthought. That’s why wealth redistribution will never work. If you redistributed the money back around to these people, the wealthy would end up with all of it again because a consumer will always give their money to a producer. That’s why they’re called consumers. If you want to build wealth faster, you need to think like and act like a producer. Not a consumer. Minimize your consumer spending and maximize your investing.
Lastly, the wealthy do not spend money emotionally. To them, it is 100% logical. I got off a call with a client today who is on his way to becoming wealthy and he dropped 1/3 of his liquid net worth into investments with me without blinking an eye. He wasn’t whining about his bills and how he would feel scared if he didn’t have enough cash on hand. He was making a logical, economic decision. Those who have slow or no wealth spend with 3 main motives. Fear, greed, and comfort. They make ALL of their financial decisions emotionally, which is why they don’t have wealth yet. They fear what others think of them. They want to strike it rich and do it the easy way. They have an incessant need for self comfort which drains them of their means to build wealth. This is the definition of “the love of money” that everyone quotes the Bible on. Not the other way around. If you want to build wealth faster, you must remove emotions from your money entirely. Your emotions are like an expensive spouse, boyfriend or girlfriend who doesn’t really love you and just wants your money. Leave them out of the equation.
We could do all of the technical analysis in the world and talk about investments and returns and economics, but the bottom line is, if you don’t behave like the wealthy, you won’t have what they have.
If you’re reading this and you’ve realized you’re operating the wrong way with money or maybe you could use some economic accountability or reinforcement I want to offer for my team to help you.
We have a free program called the Wealth Creation Blueprint and it will give you a look at exactly where you stand financially, where you need to be based on your goals, and narrow down all the steps you must take to get there. If you’d like to take advantage of this free offer, I want you to click here.
Own Your Potential,
Jerry Fetta
CEO & Founder of Wealth DynamX
Jerry Fetta helps his clients gain more financial knowledge, make more money, keep more of it, and multiply what they keep.
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