Money, of course, plays an important role in our lives. While it’s not everything, it can help you achieve your goals. That’s why you should always increase your financial intelligence.
An important part of financial intelligence is learning how to build wealth.
I recently read a good book on that titled The Millionaire Fastlane by MJ Demarco. You might not like the title, but it’s a solid book with good advice. In fact, it’s one of the best books I’ve ever read on wealth creation.
The book contains a lot of lessons, so I can’t cover all of them here. But I’d like to share the key lessons with you. If these lessons seem controversial, I suggest you to read the book yourself. I don’t have the space to explain the concepts in depth, but the book gets its point across well.
Without further ado, here are seven key lessons on wealth creation:
1. Understand what true wealth is.
First of all, we need to understand what true wealth is. Contrary to popular opinion, it’s not about having a large house or luxurious cars. Instead, true wealth consists of what the author calls the three fundamental “F’s”:
- Family (relationships).
- Fitness (health).
- Freedom (choice).
Money can help you get these (especially Freedom), but this is not true wealth itself. Someone can have a lot of money but still lack true wealth. An example is a rich person who:
- has constant fights with his family,
- is always exhausted because of overworking, and
- has to work a job he hates.
In this case, the person is rich financially but doesn’t have true wealth.
With this understanding in mind, let’s now focus on financial wealth (or just “wealth” for short). The role of financial wealth, as mentioned above, is to help you get the three “F’s”—especially Freedom.
2. Beware of the conventional way.
When it comes to building wealth, the conventional wisdom is to invest your money in the market, usually in the form of stocks or mutual funds. Then you wait for the money to grow. This approach (called “the Slowlane” by the author) is suggested in most personal finance books.
While this approach is better than living carelessly, it has a big problem: it’s slow. It may take decades before your investment reaches a significant amount.
Wouldn’t it be nice if you could enjoy the fruits of your labor sooner rather than later? Decades sooner, that is. That’s where the Fastlane approach comes into play.
3. Build a business system.
The way to build wealth is not by reducing expenses while having the same amount of income. No. The way to build wealth is by exploding your income while controlling your expenses.
To do that, you need to build a business system.
The key word here is “system.” It’s not enough just to have a business. You must also have a system in place. The idea is that your business should be able to run without your constant presence. If it isn’t able to do that, then the business is essentially just a job.
Building a system is the key to getting freedom (see the three “F’s” above). Why? Because it allows you to stop trading your time for money. You don’t have to constantly spend your time to make money. Instead, you can use your time for something else, and the money will still come.
How can you build a system?
The key here is automation. Automate as many parts of your business as possible. Having an online presence, for example, allows you to keep your store open 24/7 without further effort on your part. It’s one way to automate your business.
In essence, here is what you should do:
- Identify the parts of your business that still require your time.
- Find ways to automate them.
4. Attract money instead of chasing it.
The right way to make money is not chasing it, but attracting it. Here is how the author describes the situation:
“Money is like a mischievous cat; if you chase it around the neighborhood, it eludes you. However, if you ignore it and focus on what attracts the cat, it comes to you.”
How do we know if we chase money? A “money-chaser” asks these kinds of questions:
- How can I make money starting a business?
- How can I make a passive income?
As you can see, the focus is on the money. Since money is the focus, they might even cut corners to get what they want.
What you should do instead is focus on solving people’s problems. Chase needs, not money. A business that solves problems attracts money.
The truth is: money is just a reflection of the value you give to others. So the more you solve people’s problems, the more money you will make.
5. Be responsible and accountable.
An attitude you must have is to be both responsible and accountable.
Being responsible means you don’t blame an external factor for something bad that happens to you. You don’t blame your customers, your suppliers, or the economy. You blame only yourself and your choices.
But that’s not enough. You must also be accountable. Being accountable means you take precautions to ensure that the bad thing won’t happen again.
6. Execution—not ideas—is king.
Many people think that having a good idea is the important thing to build a strong business. It’s not. What’s important is having a good execution.
Google is a good example. Before Google, there were already many search engines. But Google was the one with the best execution. Similarly, there were already many digital music players before iPod. But Apple was the one with the best execution.
7. Focus.
Building a successful business requires focus. Why? Because that’s how you build momentum.
So don’t do multiple things at once. Instead, focus on just one thing, and do it in the best possible way. As the author puts it: “A scattered focus leads to scattered results.”
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Applying these lessons takes time and commitment, but they are definitely doable. Adopt the mindset, take consistent action, and you will get results.
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