Saying you want to be wealthy isn't
good enough. You need to come up with a workable plan and put it on paper. "The
written plan forces you to do something," Welch says. "Calculate what
you need to earn and how to invest. The plan isn't just the goal, it's the
whole thing -- the dream, the goals, the options.
2. Save, save, save
The end result of your financial
plan should be systematic investment. Get in the habit of saving money. Build
an emergency fund in a money market account so you don't have to raid the rest
of your savings and investments when there's an unexpected major expense. Make
it a point to save at least half of every pay raise.
Don't be a walking billboard for
overpriced designer clothes, shoes, sunglasses or jewelry. Don't allow your
house or car payments to be budget-busters.
Some people say that if you can eat
it or wear it, don't put it on your credit card. That's good advice, but take
it further. Try not putting anything on your cards that you can't pay off in
two or three months. You need only one or two credit cards. If you have a
fistful, pay them off. Remember, debt holds you back. "It reduces cash
flow for other things, including investing," says Welch. "If no one
gave you money to borrow, you'd be better off and the economy would be smaller.
If they only let you borrow 75 percent of the value of your home, you'd be a
heck of a lot better off."
It takes money to make money, but
that doesn't mean you need a lot to invest. Open an account with a mutual fund company
that has no-load funds and low expense ratios. Build a diverse portfolio and
you can reasonably expect to earn 8 percent to 10 percent annually on your
investments over the long haul.
In the 1996 book The
Millionaire Next Door: The Surprising Secrets of America's Wealthy, the authors state that two-thirds
of the millionaires are self-employed, with 75 percent of them entrepreneurs,
and the remainder professionals such as doctors and accountants. "The idea
that most people inherit wealth is outdated. A lot is built through businesses.
Business creation is the No. 1 driver of wealth in this country," says Zultowski.
A good financial planner can help
you fill your portfolio with the right investments and dump the wrong ones. You
don't need to relinquish control, but you do need to form a good working
relationship with someone who has expertise in this complicated area.
"About 76 percent of those
surveyed are actively involved in the day-to-day management of their financial
affairs," notes Zultowski. "They get involved; they learn about
finances, they're not day traders. They work with advisers but ultimately make
their own decisions."
If you can't afford to have a
financial planner manage your money, many of them will review your portfolio
and make recommendations for a one-time fee.
