Making money is not finance... Making money is sport! Yes, because achieving financial independence is a bit like weight training: you need a program, a plan! And rather than copying what you find on the internet, why not create your own strategy to become rich. Let's build together a plan to earn money...
How do you think people like Warren Buffet or Michael Bloomberg became billionaires? How did David Swensen make Yale the second richest university in the world with an endowment of over $22 billion? They all had a strategy for getting rich. Because you really think that the "rich" are rich by chance? Well, obviously, there are those who inherit a financial empire or a fortune and there are also those who... win the Euromillions. But many rich people, millionaires or even billionaires have succeeded by starting from nothing, with no money and no family behind them. They went from poverty to wealth because they knew how to get rich from scratch by following a plan of action.
So why can't you create your own? Complicated, you might ask? Not so much. A get-rich-quick financial strategy is first and foremost a money-making program, not a financial strategy like you would find in a business or a large private structure. Therefore, even if some elements and steps will be similar, your personal financial plan will be much less complex. Indeed, the factors on which it will be based will be much less numerous. In addition, apart from you and possibly members of your family, a personal finance method will not involve anyone else, so there will be no negotiations with a third party, no one to discuss your decisions, etc. You will be the only one in charge and also... the only one responsible for your decisions. Convinced? So let's get started?
In order to implement a strategy to become rich you must first understand what a financial strategy is.
The term is primarily used in the field of business economics. However, its classic definition can be extended to the field of personal finance.
There, I think it's clear... so no reason to dwell on it!
If you take an interest in people's lives, especially through social networks, you will have the impression that other people's lives are, financially, 100 times better than yours. Going out to dinner, a romantic trip, new furniture for the house, buying a new car... But how many people really have strong enough finances to afford all this without weakening their daily life? In other words, how many can say that the further they get in life, the more money they make? Most people - and obviously the further down the income scale the more true this is - afford these little pleasures BUT at the expense of other things. At the same time, what if you could afford all the things you want WITHOUT weakening your finances? Well, having a strategy to become rich is also having a strategy to earn money, and by that I mean "more money" that will allow you to have those little pleasures without burdening your daily life.
Wealth is created over time. This time is more or less long depending on your starting means but also on the culture of money that you have. The "short term" does not necessarily have its place. Becoming rich is not a sprint but a marathon. However, unlike a marathon, if your action plan to earn money is well prepared, the more you will advance and the more comfortable your financial situation will be.
In this respect, seeking financial independence is like playing sports, without a training plan, at best your results will be mediocre; at worst they will cause you more pain than anything else. Without a plan, without a program, you'll be sailing blind, trying one thing and then another without getting real results.
Having a personal finance strategy will do several things for you:
Your plan to become rich will be based on a series of parameters and factors that you will take into account. Let's take a look at the most useful of these before integrating them into our overall strategy
This is the global starting point of your strategy. Basically, this factor answers the questions: "Why are you doing this?" and "What is this money for? Obviously the answers are as multiple as the people but it is possible to divide them into three main groups:
There are four pillars of financial autonomy that will allow you to earn money (in addition to your job, if you have one).
These four bases of financial freedom have already been discussed in a previous article, I refer you to it for more information.
Each step of your program to become rich must be located on a time scale. Indeed, your management will be different if you have a 3 year or a 20 year objective! Classically, we define a strategy according to whether it is short term, medium term or long term. And in general, the earlier you start and the more time you have ahead of you, the better the results will be.
As we saw in the initial definition, the short term vision doesn't really enter into your personal financial strategy. Or only as an action to be accomplished (buying a stock for example). Therefore, when creating your action plan, you don't need to worry about anything specific... unless you're working on a lever that you don't master at all, in which case you'll need a much more detailed action plan that will take into account several other factors that are necessary for your level of competence.
Apart from this particular framework, focus on the medium term and, obviously, on a long-term financial strategy.
Every investment has a risk. Generally speaking, the higher the risk, the higher the gains. Any strategy to become rich must therefore be based on the consideration of these factors. Globally, risk is defined in relation to a three-level scale:
The risk factor is an area of finance and investment in itself. It would be too complicated to go into detail here. However, you should know that risks can be tempered by strategies. For example, high risk products can have this factor reduced depending on the investment choices and management you make.
When you say risk, you also say gain, i.e. what your personal financial plan will bring you. Because yes, the objective of your strategy is to make you earn money. Whether it's dividends, capital gains or cash flow, depending on the type of investment, your system has only one goal: to implement a method to earn money. And here we are obviously talking about what will fall into your pocket, after all possible costs and... taxes. This figure will give you an idea of how much you can expect to earn in the long run by increasing the amount of your investments.
There are, of course, a lot of other factors that we could incorporate into our "get rich quick" method. However, the above list is more than enough for what we want to create: a simple tool to learn how to make money.
