This is the first article from Loral Langemeier, a financial coach and author. Click here for a list of her articles.
Many Americans are having a conversation about money that needs to change if they want to become millionaires. In fact, just the phrase "manage your money" is thinking way too small.
Traditional thinking about money is a model that plans for poverty. And it's the wrong conversation. Instead of talking about "managing" our money, we should be talking about "growing" our money, about building our wealth. Christopher Columbus didn't come across to America just for people to get jobs and have 401(k)s; he wanted to have freedom!
Everyone wants to become a millionaire. It's the American dream. Unfortunately, the conversation about reaching financial freedom is usually around "conventional wisdom" and is driven by how we've been conditioned about money our entire lives. It's about scarcity-thinking and scrimping and saving for a future when there might be hard times and cutting back on the things we love -- like a $3 latte, for instance. This is thinking small and planning for poverty. Who wants that?
Now, if you're depriving yourself of a daily latte, then you're trying to save $90 a month. That's about minimizing, not creating and expanding. I have a better idea: Go
create more money
, learn to earn, so that spending $90 a month isn't even an issue. Let's make some cash!
I teach my clients how to use Wealth Cycle Investing. This is using your skills to build your own cash machines and then to invest directly in double-digit-return assets. Yes, assets with double-digit returns: We do it all the time. Most people do what I call "park and pray." They
their money in typical Wall Street stocks, IRAs or 401(k)s and
for financial security down the road. Park-and-pray is
what I call a good investment strategy. And it's a lousy conversation.
Why own oil company stocks when you can own the wellhead directly? Why own stock in a company when you can own the company? This is what direct investing is: owning assets and being involved in the operations, with higher returns and no middleman taking a cut of your money. I'm a fan of direct investing in real assets, ones you can see and touch and be a part of. The opportunities for direct investing and asset allocation are infinite.
They could include rental properties and other real estate, businesses such as laundries or oil and gas wells and even private debt instruments. Then, I take the income from these assets and invest in even more assets that yield more returns. Assets to income, income to assets. This is the Wealth Cycle -- the secret to creating and sustaining wealth that the wealthy have used for generations. I've done it, and so can you.
I often hear, "I don't have time!," "It's too hard" and "I don't know anything about making money" -- and other objections. As a mother of two small children and the founder and president of Live Out Loud, my wealth-building community, I too know what it's like having a few demands.
When people tell me they don't have time, I tell them they need a team. Millionaires don't clean their houses or mow their own lawns, and neither should you. A housekeeper or lawn service could well be part of your team; you have to buy your time back.
Millionaires also surround themselves with a team of people who know more than they do. You should do the thing you love to do, and build a team to do the rest. Your team could also include a lawyer, accountant or marketing expert -- whomever you need to fill the gaps in your expertise. Remember, there is no such thing as a self-made millionaire. It takes a team to make those millions.
Having a team also reduces your risks along the way. You will benefit from their experience and resources and gain access to the other professionals you will need on your team. Your job, as the leader of your wealth creation, is to find team members whom you like, trust and respect, and who want to have a different kind of conversation with you about money. It's
get to decide who's on your team and what the conversation is going to be.
Getting your team together is critical, but it's just one part of building your wealth. There are also what I call the 12 building blocks of the Wealth Cycle.
The first three are always the same: the Gap Analysis, Financial Baseline and a Freedom Day Plan. The Gap Analysis creates a model for you of where you are today and where you want to go. The Financial Baseline building block gives you an overview of your current financial situation -- your income, expenses, debt and investments -- everything is included. Your Freedom Day Plan is where you get to see the light at the end of the tunnel by defining your ultimate wealth objectives.
Your building blocks become your wealth-building plan. Other building blocks include Entities, Wealth Accounts and, of course, Cash Machines. All 12 are described in my books. Get these right, and you can become a millionaire in three to five years. Really. I have worked with hundreds and hundreds of people across the country who have done this. And many started out right where you are today.
However, you must do the right thing at the right time. You have to understand which building block sequence is right for you. The order of the building blocks in a wealth-building plan differs, depending upon the person and his or her individual needs and objectives. Once you complete the first three building blocks, you will see the sequence for the rest that's right for you. Sequencing is the foundation of the Wealth Cycle Process.
And finally, here is another conversation you won't often hear: Yes, debt is a big issue for many. As I said, living small to pay down your debt first is a recipe for failure. I say build your cash machine first, and launch your wealth cycle. Put yourself first -- make more money,
pay down your debt. Makes sense, right?
All of this we are talking about here is a different kind of conversation about money, one about leading your life, about thinking and living big, not small. Lead the life you want to, not a life you have to. So get off the couch and get into action! Get in the right conversations. The more you do this, the more you will condition yourself to a new way of financial thinking. You will learn to act, think and make money the way millionaires do.
A master coach and financial strategist, Loral Langemeier has proven how consumers and businesses can create wealth from the inside out. As author of "The Millionaire Maker" and "The Millionaire Maker's Guide to Wealth Cycle Investing" and director of Live Out Loud, a financial coaching and mentoring company founded in 2000, Langemeier has become one of the most successful business and financial speakers in the country.