Learn the Basics of Wealth-BuildingApr 09, 2023
Anybody can become a millionaire. There’s nothing glitzy, glamorous, or Instagram-worthy about the steps for building wealth.
The co-founder and Chairman of the Board of Her Best Life is living proof.
In ten years, Wendy Papasan went from a stay-at-home mom to one of the largest, most successful real estate business owners in the United States. Her business generates more than $3 million in annual revenue.
How did she do it? There’s no secret. You can build wealth, too!
Wendy and her husband have practiced the day-to-day principles of building wealth.
Read on as Wendy uses her story to teach you about the basics of wealth-building.
➥ 3 keys to building wealth
The first thing I learned about business was how to read a balance sheet and a profit and loss statement. Too many women start a business without knowing how to prepare, read, and review the bottom line.
To build wealth, you must know your cash flow, what you owe, what you own, and how your day-to-day financial habits impact your wealth goal.
➥ Measure net worth
It's tempting to look at your income and feel good about your financial status, but that's not wealth. Your net worth defines wealth.
Net worth is a measure of everything you own. Everything.
Add up all your assets, including your retirement fund, cash, real estate, and other assets. Next, add up your debt. All of it. Car loans, credit cards, medical, education, and mortgage. Whatever you owe.
Subtract what you owe from what you own. Now you have your net worth.
Telling yourself the truth about your finances gives you power over your earnings. Make sure you're building assets -- not massive debts.
➥ Set big goals
I wanted to own 10 rental properties to generate passive income. After doing the math, I realized that achieving a passive income of $75,000 was my freedom number. I knew that owning 10 rental properties would get me there.
I realized these things would go hand in hand: owning 10 rental properties would give me the passive income I needed and increase my net worth to a million dollars.
Your goals should be incrementally measurable over time so that you have evidence that you're making progress, and so that you have the motivation to get there.
➥ Thrift for the win
You will never experience financial freedom until you save more than you spend. Otherwise, you're prone to making financial and career decisions out of necessity. That's not freedom.
I still compare prices at the grocery store and look for the cheapest options. Pennies compound over time.
➥ Live your bottom line
I hope my story inspires you to bring financial purpose into focus.
None of these things "sizzle" with excitement. You're not likely to go viral on Instagram. But you are capable of doing all of it.
Knowing exactly where you stand financially on any given day impacts your decision-making where it counts - in the "now" - and as you calculate what "freedom" means in the context of your life and career.
Set goals for yourself and have a clear finish line in mind. Having a 10-year, 5-year, and 1-year finish line can help you stay focused and achieve your financial goals -- in terms of saving, investing, and spending.
Details matter as you build wealth, even in the grocery store.
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