The 7 Steps to a Truly Rich Life – Part 1

by Dennis Perry on December 18, 2011

My focus has shifted over the past couple of years from being highly focused on the financial aspects of “wealth” to having a wealth of experiences; to creating great balance in my life and for my clients; to living a “Rich Life”.

When I speak to groups and in my coaching and mentoring services, however, I am often asked to describe what it takes to become wealthy from the financial perspective.  There are many great teachers in this area and each of us has our own “system” or ideas.  But, when you really take the time to analyze the different systems, they are all based on the same financial principals.  For me, I believe it can be distilled down to 7 key components or steps.

Today, I will give an overview of the first 2 steps to a Rich Life.

There is really no particular order in which these steps should be completed.  We are all at different points in our individual journey to a Rich Life.  At any given time, you could be working on several steps at once. 

In general, though, the order I present them in this series of articles is the sequence I find to be the most effective, especially if you are just starting on this journey to financial independence.

Get Control!

The first step is Get Control.  You absolutely must get control of the money that is coming into your life right now.  There are two main components to Getting Control: Money Management and Debt Control/Elimination.

It is really unreasonable to expect God or Universe, or Infinite Intelligence to send more money your way if you can’t manage the money that is coming to you now.  You simply must gain full control of your revenue so that you can put it to work for you instead of the other way around. 

Managing money involves taking charge of not only what comes in but especially what goes out.  The simplest formula for getting rich is to spend less than you make and wisely invest the difference.

This first step is where that begins. 

Once we are getting our current income managed, the next step is to get control of the outflow of money.  Debt comes in many forms.  Some of the debt we accumulate is bad, some of it is useful, and all of it can be dangerous. 

The bad debt though is crippling and will keep you locked in financial slavery.  In difficult economic times as we find ourselves in now, even good debt can be troublesome.  There are ways to manage and eliminate debt, both good or useful and bad.  The bad debt is of greatest concern initially.

I teach a very simple method to begin the process of controlling debt and taking back control of your financial future.  I discussed debt elimination in a previous article which you can read by clicking here.

Get Clear!

The second step is Get Clear.  You must become very clear on where you are currently and, equally important, where you want to go.  If you want to map out a trip on MapQuest or Google Maps, you need 2 important pieces of information:  where you are starting from and where you want to end up. 

The same can be said of the journey to wealth.  You must know exactly where you are now and exactly where you want to go in order to construct a workable wealth plan.  As the rabbit in Alice in Wonderland stated, if you don’t where you are going, any road will get you there.

Getting Clear involves five key components.  First, organization of your financial records is critical.  If you, like me, are not the most organized person in the world, then get someone to help you but, by all means, get this step done as soon as possible.

Next you need to set specific goals with clearly stated objectives.  To get where you want to go, you first have to know where that is.  You don’t necessarily need to know all the steps but you certainly need to know your desired destination.

The third component of Getting Clear is to learn how to read some very basic financial reports.  You don’t have to become a CPA or Financial Analyst but you do need to understand the most basic statements for your personal finances: the Profit/Loss statement and the Balance Sheet. 

These are relatively easy to generate once your records are well organized.  Financial software like Quicken and QuickBooks can be very useful here as well.

When you have these three components under control, it will become easier to see the gap or the distance between where you are right now and where you want to end up.  By a simple analysis of this difference, a plan can be developed to help you close the gap.

This analysis and then plan development are the fourth and fifth components of this second step.

In the next article I will introduce the next two steps.  In the meantime, spend some time working with the first two.  Get your records organized if needed.  Create a few goals and targets for the next 12 months.  There is no better time than now to get this started.  As one of my mentors says, one year from now you will wish you had started today.

If you feel you need a coach or guide to help you, drop me a line and we’ll talk.

Until next time, live your life your way.  Do the hard work now so you can live easy tomorrow.

Dr. Dennis Perry

The Wealth Doc

 

 

 

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{ 4 comments }

Sonya Lenzo December 19, 2011 at 9:05 am

Dennis, If you asked a 100 people to tell you how much money exactly they have coming in each month, how many could tell you? And if you asked them how much was going out, would that amount be higher or lower?
Sonya Lenzo
http://www.oldbooksmarket.com/booksoncats/

Clare Delaney December 19, 2011 at 8:24 am

Thanks Dennis, Control is indeed hugely important. The concept of instant gratification has caused many people to forget the basics of money management.

EcoExpert
Eco-Friendly Tips – Save Money, Save Water

Phil December 19, 2011 at 1:23 am

Another great post, Dennis! Your focus on Control reminds me of Peter Drucker’s quote that, “what gets measured, gets done!” As a nation and as individuals we’ve been living with deficit spending and too much impulse buying for far too long. Thanks for the reminder!

Phil
http://www.PhilipHumbert.com

Expert persuasion strategy December 19, 2011 at 1:00 am

This is the first way to get ahold of the personal finances of an individual to become wealthy.
Scott Sylvan Bell
Expert persuasion techniques
Now go implement!

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