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Automatic wealth The 6 steps to financial independence - Masreson M.

Masreson M. Automatic wealth The 6 steps to financial independence - Wiley & sons , 2005. - 291 p.
ISBN 0-471-71027
Download (direct link): automaticwealththesixstepsto2005.pdf
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Start Saving Today
Starting today—literally, today—begin the practice of saving.
Even if you are living from paycheck to paycheck, you must start your saving program today. You must get your hands on some amount of money and invest it immediately. Start with at least 10 percent of your gross income. If you don’t have that much cash, put away as much as you possibly can.
The reason you want to start saving now, even if your income is small, is that you want to create the habit of saving. When saving becomes habitual, it becomes easier. And anything that you can do easily, you’ll do better, more often, and longer term.
Now, there’s one more habit of highly successful wealth builders that I want you to start cultivating . . .
Step 3: Develop Wealthy Habits 93
I have no statistical evidence that this last wealth-building habit is a widespread trait among self-made rich people, but I suspect that it is.
I believe that most successful moneymakers regularly count their money. I don’t mean that they literally count bills. Rather, they regularly assess their fortunes.
I believe this is true especially in the early stages, when they are just beginning to grow their wealth. As their net income grows and they feel more comfortable with their wealth and more confident of their income, they count less.
When they get superwealthy—Warren Buffett wealthy—they don’t have to count their money. Fortune magazine and countless other entities do it for them. But on their way up, they count. And that’s what I recommend you do.
Specifically, I suggest that you do a personal balance sheet every month. Create a spreadsheet that lists all your assets and all your debits. Include valuable possessions, stocks, bonds, mutual funds, gold, real estate (aside from your home), and so forth. Accurately estimate the value of everything. If there is a question about how much something is worth, choose the lesser number. List all your indebtedness, too. And be completely candid.
Just going through the process will train your mind (and heart) to understand financial wealth as financial net worth. After you’ve done this six or seven months in a row, it will become automatic.
And while you are doing that monthly spreadsheet, remind yourself of the saving goals you’ve made—that you will save more money, in both absolute and relative terms, with each passing year.
You can make this exercise a bit more exciting by promising yourself this: That you will be richer each time you check. That you’ll do everything necessary to ensure that when you add up your assets every month, the bottom line will be larger than it was the month before.
You’ll be amazed at how much this simple commitment can affect the way you think and even the way you act. I remember how it changed me.
Louis, the accountant I hired when I started to earn a radically increased income, got me started doing it. (You remember Louis. In
Chapter 1, I told you a little bit about what I learned from him.) We began our relationship by creating my first personal balance sheet. It was good to see that after so many years of struggling, I was finally worth something. Six months later, we tallied my wealth for the second time. I was anticipating a huge number, because I’d enjoyed several extremely significant financial windfalls. I was also enjoying my new life, my new house, my new car, and so on. You can imagine how upset I was to discover that I was not, as expected, getting richer. Instead, I was getting poorer!
“I guess I’ll have to make more money,” I said.
“You’re making plenty of money,” Louis assured me. “The problem is you are spending too much.”
To remedy my overspending habit, I expected Louis would put me on a budget. “Budget-shmudget,” he said. “We’ll start looking at your balance sheet every month.”
And that’s all we did. Once a month, he’d stop by my office and we’d add up the numbers. And it didn’t take long for my financial trajectory to begin moving in the right direction.
Simply by counting my money once a month, my bad spending habits quickly halted.
• I stopped buying things on credit—even cars.
• I started paying off my mortgage, as fast as I could.
• I stopped investing in volatile stocks—unwilling to see them take a dive.
• I started asking myself before I bought something: “Will this make me richer or poorer?”
Practice the habit of counting your money, and the same thing will probably happen to you.
You can easily learn the eight habits of wealthy people. And when you do, you’ll find that the poverty mentality that once mistakenly urged
Step 3: Develop Wealthy Habits 95
you to spend yourself rich has been replaced with a new kind of thinking that rewards you for spending less.
This happened to LJ. A hard worker and a natural salesman, he was making a good income in the early 1980s. He bought and renovated a beautiful house on Long Island, leased a few luxury cars, and filled his life with brand-name toys and gadgets.
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