Traditional wisdom tells us that we have to have some money before we can start building our wealth. Traditional wisdom is wrong. You can, and need to, start building your wealth even before you have money, otherwise you won't know what to do with your money when you get it. According to research studies, 80% of all big lottery winners declare bankruptcy within 5 years. You have to know what you're going to do with money before you get it, otherwise, chances are that you'll waste it.
So how can you build wealth even before you have money? By thinking, planning and actually researching the investment or asset-building projects you might do before you ever get any money. This kind of role playing will put you in the right kind of mind set for wealth, which means you'll be fully prepared to take action when the time comes.
For instance, imagine that you will inherit $25,000 from your long-lost great-aunt. What would you do with it? Think, really think. You've been given a one-time gift of $25,000. What do you want to turn that into? Do you want:
- A great once-in-a-lifetime splurge vacation?
- Passive income for the rest of your life?
- To go back to school using the money?
- Save it up for a rainy day?
Of all the options above, passive income is really the best choice. That means investing some or all of that $25,000 into a financial vehicle that will produce income for you without you having to work for it. That passive income, in turn, can give you all the other things: you can go on vacation with it, pay tuition with it or save it all up for a rainy day. So go for passive income first, above all else.
Now, what kind of passive income? Do you want to invest in real estate, the stock market, a franchise, a business, what? Do you know how much that money can buy and how much you can leverage it? No? It's time to find out.
Before you ever get money from your long-lost great-aunt, do the research and take the action steps AS IF you already had the money. For instance, if you're interested in real estate, call up a real estate agent and find out what kinds of investment properties you could buy with that money. Have them show you the properties for sale in your area. Do you want to buy a rental house or a commercial property? Find out the pros and cons of each. Go to the bank and find out what loans cost and what kinds of documentation you have to provide to get a loan. Find out about your credit score. If you find an interesting property, call up the county courthouse and find out about that property. What kind of taxes do you have to pay on it? Are there building limitations or easements? Who might you eventually be able to sell the property to and at what price? What kind of income could you make monthly on this kind of property? What kind of passive income potential is there?
There are hundreds of steps to buying any property, and you want to know about all of them before you have the money. That way, when you get the money, you'll know exactly what steps to take and you won't squander the money on useless "doodads." In fact, taking these steps will actually attract the needed money in your life. They say that when you want something, start knocking on doors. The door you're knocking on may not open, but another one will. If you want wealth, start doing research and knocking on doors-one will open up for you and you'll be on your way!