by Anne-Lyse Wealth
March 17, 2022
Summary. The first step to building wealth involves your mindset and behaviors. To build wealth, you must first address the systemic and mental barriers faced by many Americans who grew up in families and environments without access to wealth. Changing your mindset and financial behaviors, or building a mindset and creating good financial habits conducive to building wealth, are the real and necessary first steps.
- To start, let go of limiting beliefs. When you grow up lacking money or the resources to make enough of it, thinking there is a shortage of resources, or watching people around you live paycheck to paycheck, you may be more likely to believe that wealth is reserved for a select few.
- To overcome this mindset and believe you deserve abundance, practice thought work daily. This is the act of consciously paying attention to your thoughts and then choosing to entertain different ones instead.
- Next, accept that money can do as much good as evil. Don’t let fear stop you from pursuing wealth or the kind of paycheck you need to support you and what you want to accomplish in your lifetime.
- Finally, understand that a high income is not enough. Building wealth requires intentionally managing your expenses — and, yes, investing. Investing is for everyone, and it can help even the playing field.
Do you want to be wealthy and financially free? Most people probably do — but it is not a leisurely pursuit. The widening wealth gap between the rich and the poor makes it seem impossible for most.
According to a recent Credit Suisse Global Wealth Report, millionaires represent less than 9% of the United States population. Even so, the same report notes that in 2020 alone, there were 1.7 new millionaires in the U.S. According to business theorist Thomas J. Stanley, who studied more than 1,000 millionaires for his book The Millionaire Next Door, 80% of U.S. millionaires are first-generation “rich.” That means they didn’t inherit their wealth but built it over time.
These statistics can make you wonder what it takes for a person to overcome humble beginnings and achieve the “American Dream.” What does it take to become a millionaire when you don’t come from wealth?
The first step to attaining wealth — at least for Americans not born into it — is much more personal than mimicking the habits of “The Millionaire Next Door” or investing wisely. Such approaches often fail to address the systemic and mental barriers faced by many Americans who grew up without access to wealth.
Changing your mindset, or building a mindset conducive to wealth, is the first step to attaining it. This means believing that wealth is accessible and you are worthy of wealth. Without that mental drive, the other strategies are moot.
To achieve this mindset, you must let go of limiting beliefs. For most people, developing an abundance mindset, or believing there are enough resources and opportunities for everyone, requires an intentional effort. This is even more true for those who grew up with limited resources and less access to wealth.
According to a study conducted at Purdue University, many of your financial habits are formed by age seven. That means your feelings about money are primarily influenced by how people around you talk about or behave around it.
When you grow up lacking money or the resources to make enough of it, thinking that there is a shortage of resources, or watching people around you live paycheck to paycheck — you may be more likely to believe that wealth is reserved for a select few. I suppose you might be wrong.
It takes more work to expect abundance when you don’t see it around you.
“Every day, many negative thoughts race through our minds. If we don’t learn to filter those thoughts, we start believing them. Eventually, they can lead to a scarcity mindset, which leads to scarcity actions or broke-ass decisions,” said Rachel Rodgers.
Rodgers doesn’t believe in ignoring our negative experiences. Instead, she suggests using them as fuel to help us build a better future. “For example, changing your thoughts is not going to make racism or violence against Black people end,” Rodgers said. “Racism presents many challenges and obstacles to our ability to build wealth. That said, we can work with our thoughts to choose a more effective and empowering response to the racism we experience. Our anger can be a powerful fuel for action.”
Rodgers believes in rewiring our brains to expect abundance and emphasizes the importance of making million-dollar decisions before becoming a millionaire. In Rodgers ‘ words, this involves doing some thought work, “the act of consciously paying attention to your thoughts and then choosing to entertain different ones instead.” She recommends practicing this daily.
“Even though I run an eight-figure business, I do thought work daily,” she said. “When you think more positively about yourself, your work, your intelligence, and your financial decisions, you will start taking more positive actions. Eventually, after some practice, it can improve your life.”
According to Rodgers, million-dollar decisions create time, energy, and options. When you apply for a job, receive an offer, and make a counteroffer because you know your worth, you make a million-dollar decision. When you are proactive about asking for a raise, researching industry rates, and making a case to your boss, you are making a million-dollar decision instead of growing overwhelmed and not acting at all.
Ultimately, your mindset can lead to significant missed opportunities if you don’t change it and believe you deserve abundance no matter where you start.
Accept that money is not always evil.
We’ve all heard the saying that “money is the root of all evil.” Many people — especially those with negative formative experiences with it — will stop desiring wealth because of that belief. But understanding that you can use your money to do good in the world can be a game-changer.
Realized there were other ways to give back to your community. Use money to help others access education and, in turn, have a greater chance of accessing financial freedom.
Similarly, Rodgers initially went to law school because she wanted to work for a nonprofit, advocating for marginalized communities. “The pressures from family members and my student loan debt eventually pushed me to give up on my dream for the sake of making money. I flew around the country, interviewing for jobs I didn’t want. I was offered an associate attorney position at a firm representing Big Oil companies.”
Ultimately, Rodgers’ belief that she could find a more outstanding balance between earning and giving drove her to turn down the position and launch her own business. She credits her decision to her Aunt Barbara, who paid the balance on her college tuition, and the parents of a girl she used to babysit for making her realize that all rich people were not evil. “Now, with my business, I help thousands of women and other members of underrepresented communities to increase their earning potential — and I make millions doing it.”
The big takeaway? Money can do as much good as it can evil. Don’t let fear stop you from pursuing wealth or the kind of paycheck you need to support you and what you want to accomplish in your lifetime. That would be akin to giving up before you even begin.
Understand that more than a high income is needed.
Another mind trap it’s easy to fall into is believing that a high salary will eventually lead to accumulated wealth. Realistically, it probably won’t. Building wealth requires intentionally managing your expenses — and, yes, investing.
With inflation, or the increase in goods and service prices over time, money loses value the longer it sits still. Building wealth, then, requires investing, whether it’s in the stock market, real estate, a business, or another wealth-building avenue.
Business manager Michelle Richburg shared that most of her clients, many of whom are first-generation millionaires, have had to learn the hard way that being intentional about budgeting and investing is essential to build wealth.
Schadeck similarly believes that investing provides an opportunity to level the playing field. “Most people who don’t come from a wealthy or financially literate family fall victim to this. However, the birth of online investment brokerage firms democratized the industry. Investing is for everyone.”
To get past this mental roadblock, Schadeck encourages her clients to imagine life if they didn’t have to work for money. She tells them to hold onto that vision and mirror it in their actions.
What does that look like?
Schadeck tells her clients to start investing as soon as they can afford it — even if that means putting forth a small dollar amount. “A mindset shift happens when you build financial discipline as an investor. You could start with $45,” she said, “and that small investment will build up over time with compound interest. Starting small is the secret, and being consistent is the key.”
Be willing to create your path.
There’s no one-size-fits-all for wealth building. No matter the path, what will make a difference is your consistency.
“You shouldn’t work yourself up trying to attain some made-up standard for how you create your wealth. My plan for building wealth was through entrepreneurship, and I still recommend it as the most sustainable and fastest path forward. However, that’s not what works for everyone. I know folks who’ve built wealth by investing in stocks, through real estate, or by saving,” Rodgers told me.
Whether you aspire to become a millionaire or not, no matter what path you choose, you can benefit from rethinking your relationship with money to increase your chances of making more. Money doesn’t mean happiness, but wealth gives access to options and, potentially, a better quality of life.
Changing your mindset and applying these tips may not make you a millionaire, but adopting them will benefit your wealth-building journey.
Source:
Anne-Lyse Wealth is a writer, personal finance educator, and certified public accountant. She is the founder of Dreamoflegacy.com, a platform
- https://hbr.org/2022/03/how-to-build-wealth-when-you-dont-come-from-money
Blogger’s Note: The opinions expressed here are for general informational purposes only. Doing your research and analysis before making any financial decisions is essential. We recommend speaking to an independent advisor if you are unsure how to proceed.
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