If you ask 100 different people how they created their wealth, I guarantee they all will tell you the same thing. The biggest key to wealth is buying, building, or creating income-producing ASSETS, and all wealthy people have them. When planning the steps to create wealth for yourself and your family, focus on buying, building, or creating ASSETS.
Wealth and Income Are Different
Many people learn by watching their families, friends, or culture that high income means you are wealthy. But we all know someone that has made a lot of money and lost a lot money…leaving them financially broken. The first of the steps to create wealth is to understand what wealth is. Whether by traditional employment, self-employment, or through investments—income does not equal wealth. Equity builds wealth. What is the value of the assets you hold? Do they produce ongoing revenue for you? Cash flow is important, and when your cash flow from your assets exceeds your expenses, you are financially free. But it is the equity in your assets that provides your wealth.
Wealth Is a Mindset
I believe we live in a world of abundance. You can create the life you want if you are willing to go for it, work hard, aren’t afraid of failing, and learn from others. People who take steps to create wealth and keep it over the long haul understand that it won’t always be perfect. But even in down times, they understand that they have the power to make improvements. How can you cultivate a wealth mindset? First, look at the words you are using and the information you are consuming. If there is underlying negativity or scarcity messaging…it is time to change. Reprogram yourself to have a wealth mindset by seeking out podcasts and affirmations to confirm abundance. And be sure the people you spend time with have an abundance mentality as well.
Diversify Your Steps to Create Wealth
Most people think diversification is achieved by having various investments that are all in the same asset category. For example, they own 10 different stocks or other paper assets. My definition of diversification is having different categories of assets. For instance, I own paper assets as well as real estate, businesses, and collectibles, to name a few asset categories. You may have to get some education to learn about new asset categories, but be sure your steps to create wealth include being diverse in the assets you choose.
Mind Your Own Business
Your asset column is your business—even when you are an employee. There is no question that you can create wealth as an employee. Having said that, I believe the greatest pathway to wealth and financial freedom is through entrepreneurship. As an entrepreneur, leveraging your own expertise, you can create one of the greatest assets there is…intellectual property (IP). Your intellectual property can be leveraged to create unlimited income, which you can use to invest in other assets. In addition, that IP has value. Gone are the days of businesses holding all of their value in property plant and equipment. The majority of the equity in some of today’s biggest businesses in the U.S. and internationally are their intangible assets, such as intellectual property. How do you start to create IP? Become a solution to a problem and then start creating your own content around that.
There is not one clear definition of what it means to be wealthy. You can be wealthy financially but not wealthy in other areas of your life, such as health or relationships. These steps to create wealth focus on how you can create financial wealth. In doing so, you will set yourself up for the freedom to cultivate wealth in all areas of your life.
This article originally appeared on sharonlechter.com. The long-awaited new release from Sharon Lechter and Dr. Greg Reid, Success and Something Greater: Your Magic Key, is available on September 17 from Amazon, Barnes & Noble, and other fine retailers. In this official publication of the Napoleon Hill Foundation, you’ll learn the success secrets of today’s most prosperous individuals, including John Assaraf, John Ashworth, Michael Houlihan, Bonnie Harvey, and many more.