Re-programming your thinking around creating wealth

Before becoming a business owner, I fell into the trap that possibly 90% of the working population fall into, that I was somehow creating my future pot of gold by working for someone else. How wrong I was!

Sadly, it’s a very common way of thinking which is drilled into us from a very early age. Work hard all your life and you can retire with a handsome pension - not anymore. So, on taking the leap of faith to set up my business, I slowly came to realise that to get comfortable about creating real wealth, I had to un-programme and re-programme my thinking around this subject. How do the really wealthy folks think and act? What makes them so different to the masses in how they handle their finances?

Getting the right information and surrounding yourself with people who have done it is a good starting point with any amount of personal development, so studying the work of Robert Kiyosaki has completely re shaped my approach to money.

Kiyosaki has positioned himself as one of the leading authorities on this subject and openly markets his materials and knowledge to help others understand where we get our thinking so very wrong. In his bestseller “Rich Dad, Poor Dad”, he begins by making the difference between being poor and being broke - ”broke is temporary, poor is eternal”. He refers to our thinking around rich and poor and how it can indeed shape our actions as to how we move forward. Getting to a point where money can start working for YOU rather than YOU working for IT is the crux of Kiyosaki’s philosophy.

When you think of it logically, it makes perfect sense to create investments that are generating money for you as opposed to working longer and longer hours kidding ourselves that this is the way to generate more money! This relates back to how we are programmed through our education - ”if you work hard you will earn good money”, how many times have you had that drummed into you by teachers, lecturers and even parents?

As an entrepreneur, understanding how money can work for us is an interesting concept as we grow our business. We have to understand how to work more smartly rather than more hours but still be mindful of adding to the bottom line. To be able to create a self-managing business is a goal for many of us, so a big part of that strategy moving forward, has to be around understanding how money can generate more for you rather than you and your staff reaching points of burn out by working longer hours. Mastering the power of money is what we need to strive for and with that, comes the understanding of how we need to deal with the fear of not having enough to pay the bills!

Kiyosaki talks about 2 key emotions around money - Greed and Fear. The Fear part is about what we stand to lose should a lack of income become an issue. It might be your home, your car, giving up family holidays, private education and so on. This can often be so overwhelming that is causes paralysis and stops us moving forward in what we are trying to create, and therefore, we always play it safe!

The Greed part is around how most people acquire liabilities, such as mortgages, credit card debt, excessive material possessions and so on. Here’s an example of what typically happens. The average person is given a pay rise at work of say 5% which they see as a pat on the back for hard work. As a result of the pay rise, they decided to go out and spend the pay rise on more liabilities - a bigger car for example that will now take an additional 3 years to pay off with a hike in insurance and general maintenance too.

So, what the average person does as a result of working harder, is they generate even more liabilities for themselves. Pretty bonkers huh? But, I’m sure at some point in our lives, we have all been there! This is because we fail to educate people from an early age about how to manage money! We have a fixation on creating liabilities rather than assets. Quite simply, an asset puts money in your pocket, a liability takes money out, so to acquire wealth, the focus has to be on building your assets.

In order to create assets, you also need to master your cash flow. I’m sure all business owners have their up’s and downs with cash flow but getting into a routine whereby it’s a daily ritual to monitor it is key to understanding your business financials. You can have all the financial knowledge at your fingertips, but unless you are on top of your cash-flow on a daily basis, you’re taking your finger off the pulse. One of the most crippling things for any small to medium sized business owner is not understanding how to forecast. So, we need to get smart with this action within our business’s as this will also open the door to understanding how and when we can invest in assets - but how do we start to build this side of the balance sheet?

Kiyosaki talks about how Rich Dad see’s a house for example as a liability as opposed to Poor Dad who sees it as an asset. Think about it. Even though a property may hold future value for you, it is also subject to regular monthly payments such as your mortgage, taxes, insurance, maintenance and so on. There’s also no guarantee that at the time of needing to sell your property it will reward you with a handsome profit! So, thinking carefully about what to invest in is time well spent. In 1974, Ray Kroc who founded McDonalds asked a group of student’s what business they thought he was in. Most pupils laughed at the question until one brave sole answered -”the hamburger business of course”.

No” he replied.”I’m in the real estate business” and to this day, McDonalds are one of the biggest real estate organisations in the world. Kroc understood that his primary focus in order to build his asset list, was to invest in something that interested him, which was being meticulous about where he bought land to build his restaurants. Therefore, in order to understand where to start in terms of building your asset bank, find something that interests you that you can invest in art, vehicles, rental property, stocks & shares etc.

Kiyosaki refers to this as minding your own business - keeping your focus on your business but starting to slowly build your asset list rather than adding to the liabilities. Overcoming fear is often our biggest obstacle when we are looking to move in different directions with our behaviours as business owners but being bold is a trait of successful people. As John D. Rockefeller said ”I always tried to turn every disaster into an opportunity”. Dealing with failure is paramount to having a successful business as it is essential to building our assets - some will flourish, and some will fail, but better that than not trying at all.

If you're needing to re-programme your thinking around creating wealth why not join one of our Master Mind Groups. Contact us to find out more details.

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