The basic principles for building wealth

Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals.” -Jim Rohn

Walk into any bookstore and you will see at least one section dedicated to the self-help books. I have a personal favourite - Personal finance book.

So allow me to do you a favour and list my learnings from these books. It will save you time and money. You just need to implement the learnings, for which you have Saveabhi. We have kept these learnings in mind while designing SaveAbhi. 

After pouring over numerous books I began to realize that the basic principles for building wealth are the same. Funnily they haven’t changed in a thousand years. 

The real challenge is that most people don’t pay attention to these principles and even fewer have the discipline to actually execute. 

But if you have the patience to study the age-old fundamentals of building massive wealth, you will likely succeed in building massive wealth

Here are the 7 books I’ll be referencing, in no particular order.

1. Believing is achieving

“No one is ready for a thing, until he believes he can acquire it. The state of mind must be BELIEF, not mere hope or wish.” -Napoleon Hill

Great news — an inner belief that you will build massive wealth is something anyone can cultivate.

Developing this identity (“I am going to be rich”) might be extremely difficult for individuals who grew up with “scarcity” mindsets in literal poverty.

But developing an “abundance” mindset that firmly believes you will succeed no matter what is a prerequisite for building massive wealth in nearly every case.

One of the main differences between rich and poor/ middle-class people is their perspective on wealth. The rich see massive wealth as inevitable. In their mind, success is assured.

Most people don’t truly believe they’ll ever build massive wealth. With that attitude, they probably won’t.

Building massive wealth starts with your mindset. If you believe you can get rich, you’re far more likely to succeed than someone who doesn’t really believe it.

2. If You Follow Traditional Advice, You’ll Probably Never be rich 

This is one area where the majority is never right

That’s because the majority of people aren’t wealthy. Most people are struggling financially, trying to make ends meet, an even worse majority have poor financial behaviours. Most people overspend, don’t save, don’t invest, and don’t develop their financial intelligence.

Traditional advice is actually what prevents people from attaining great wealth. The ideas are usually based on risk-avoidance and fear. They’re too small. Archaic. Outdated.

Wealthy people don’t touch this stuff.

Warren Buffet agrees. “A good investor has the opposite temperament to that prevailing in the market.”

While everyone is panicking, the wealthy are taking advantage.

Ramit Sethi once said, “Fear is no excuse to do nothing with your money. When others are scared, there are bargains to be found.

Truly wealthy people ignore the traditional advice.

In fact, wealthy people’s behaviour is commonly considered risky, impulsive, or even dangerous by the majority. Yet, they’re the ones with the fortune, not us.

In short: if you want to build massive wealth, don’t listen to traditional advice.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” -Warren Buffet

3. Make Your Money Work For You.

“Savings without a mission is garbage. Your money needs to work for you, not lie around you.” -Dave Ramsey

We all need to keep working for money because we never learn how to make money for us.

The Richest Man in Babylon explains that every “gold coin” (or dollar) is like a worker. That worker has the ability to magically produce more workers if you know how. One worker/dollar could potentially develop hundreds of more “workers” for you.

Every rupee is like a little seed that can grow and sprout more dollars. This is the essence of having “money work for you.”

Think about it. Every small expense you undertake, you are giving away 400 or 500 little "employees” that could never make money for you again. 

Our "Save the Change" feature actually helps you keep a few workers while you throw the rest. 

Furthermore, even if I put my money “safe in the bank,” I was actually wasting my money’s potential. Ramit Sethi wisely points out, “Because of inflation, you’re actually losing money every day your money is sitting in a bank account.”

become rich

4. Building Wealth Often Looks Simple and Boring.

“Live like no one else now, so later you can live like no one else.” -Dave Ramsey

This is the premise of Thomas Stanley’s incredible book, The Millionaire Next Door. His team surveyed hundreds of millionaires and discovered most of them led simple, frugal lives.

Many people who live in expensive homes and drive luxury cars do not actually have much wealth,” Stanley reveals. “Then, we discovered something even odder: many people who have a great deal of wealth do not even live in upscale neighbourhoods.

Stanley found some fascinating trends:

  • A typical American millionaire never spent more than $399 on a suit for himself.
  • Over 95% of millionaires have 20% of their income entirely in stocks.
  • 85% were “self-made” and didn’t work a typical 9–5 job.

Stereotypes associated with rich people like a massive house, fancy cars etc just aren’t normal.

Dave Ramsey agrees in The Total Money Makeover. “The typical millionaire lives in a middle-class home, drives a two-year-old or older paid-for car, and buys blue jeans at Wal-Mart,” he jokes.

It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.

“Keeping up with the Jones’” is real. In fact, trying to simply “look rich” could make you go bankrupt.

“Most people think millionaires own expensive clothes, watches, and other status artifacts. We have found this is not the case.” -Thomas Stanley

Track your expense through our spend tracker and cut out the fluff from your life.

5. Every seed takes time to become a tree. So does wealth

“This is the process by which wealth is accumulated; first in small sums, then in larger ones as a man learns and becomes more capable.” -The Richest Man in Babylon

Often, the richest and wealthiest individuals were the ones that started the earliest and waited the longest.

Most people prevent themselves from building wealth because they keep wasting their efforts on short-term efforts.

This is how individuals routinely become filthy rich through investments and the stock market. They waited, often when it appeared their investment was lost. They didn’t panic and sell. Then, they struck the gold no one else was patient enough to wait for.

Money is a long game — do you have the patience to play?

It is human nature to want it and want it now,” says Dave Ramsey. “It is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity.

Ironically, many people who might magically inherit a vast fortune would have no idea how to manage it.

You need to learn how to own massive wealth responsibly. That takes time and personal investment.

Just as your money needs time to grow, you need time to mature and learn how to successfully own that much money without losing it or letting it corrupt your values.

“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.” -Thomas Stanley

6. Don't work for a salary, work for equity

“Ordinary people work very hard for little money, clinging to the illusion of job security and looking forward to a three-week vacation each year and maybe a skimpy pension after 45 years of service.” -Robert Kiyosaki

Let’s imagine two individuals. They both want to be life coaches, and they both want to be rich.

The first individual creates a life coaching business from the ground up.

Although he has impressive profits, he is busy all the time. His income is directly tied to how many hours he works, and he can only work so much.

The second individual also creates a life coaching business, but she hires other coaches to do the work. Pretty soon, all her clients go to her hired coaches, and she gets a cut from each client. She only works when she wants to, making money while she sleeps.

This is the power of owning versus working.

If you limit your earnings based on hours worked, you’ll always hit a ceiling. You’re just one person. But if you own the enterprise, you remove all limits. Massive wealth becomes possible.

Building wealth almost always involves owning multiple streams of income — businesses, passive income, side-projects, royalties, stocks, investments, etc.

When you own, you can keep adding to what you own with very little time commitment. Tony Robbins owns nearly 30 companies, yet he barely spends any time on them. He hires others to do the work for him, while he gets a cut. This is typical behaviour of the wealthy.

Owning also means lowering taxes on your wealth. Taxes are one of the greatest leeches of wealth. The less tax you have, the more money you keep.

In India, income tax is almost 35% for HNI (it’s like giving the government your entire paycheck from January until May). But many people don’t own; most of their money comes from their job income.

Owning assets like real estate and investments often have far lower taxes. Many investments have less than 20% tax. Passive income might have no tax at all.

Poor people don’t invest. They don’t own. They work harder and harder for income that is more and more taxed.

This is not how to build massive wealth. Owning is.

7. Financial literacy is the foundation for great wealth

“Your level of success will rarely exceed your level of personal development because success is something you attract by the person you become.” -Ryan Holiday

You will only become as rich as you know how to.

Your financial intelligence (in both words and numbers) is perhaps the single most powerful stimulant for building wealth.

If you want to build the Empire State Building, the first thing you do is dig a deep hole and pour a strong foundation,” explains Robert Kiyosaki. “If you want to build a house in the suburbs, you pour a six-inch slab. The problem with most people who want to get rich quick is that they’re trying to build the Empire State Building on a six-inch slab of concrete.”

To build wealth, you need a deep, strong foundation of financial knowledge and literacy. Developing massive wealth actually isn’t that rare, but sustaining that level of wealth is.

This is important for someone like me who got a “D-” in Accounting (after getting an “F” the first time). If I want to build great wealth, I need to make some serious investments in my financial literacy. Fortunately, there is an abundance of courses online at places like Udemy.

“Rich people are rich because they are simply more literate in more financial areas than others.” -Rich Dad

Most people don’t have the first clue about “complicated issues” like budgets, cash flow, or taxes. But if you want to build massive wealth, you need to “get learned,” as my cousin would say.

If you don’t know how money works, you’ll never build wealth.

Most poor and middle-class individuals will never take it upon themselves to learn even the fundamentals of building wealth. They don’t invest in education or personal growth. They don’t read finance books, take online courses, or even learn how to create a budget.

Their continued financial illiteracy ensures they — and their family — remains poor until they die.

In the words of Robert Kiyosaki, “Illiteracy, in both words and numbers, is the foundation of financial struggle.”

Most people will continue to blame external factors for their financial drought — the economy, their job, their parents, market, etc. They don’t take responsibility for their own financial education and hence remain poor.

This isn’t always easy, especially for beginners. But if you want to build massive wealth, you need a massive commitment to developing financial literacy.

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