Financial Self-Reliance: Building Bullet-Proof Wealth
Economic self-reliance: the ability of a person, place or nation to endure successfully without additional financial support from government or other agencies.
From earthquakes in Nepal, tsunamis in Indonesia hurricanes in the South, mudslides in Northwest, and drought in Africa, it doesn’t take a weather report to convince the average person that life is full of surprises and challenges.
There will be personal storms and economic ones too. We’ve weathered severe economic storms in the past, and, coupled with challenges on the political and international fronts, our economy has taken a beating.
Now in 2018, it may feel a bit like the calm before (or between?) the financial storms. And so it probably is. The same hedge fund managers and economists who predicted the 2008-2009 stock market crash are sounding warnings again of an impending crash as most asset prices are at all-time highs.
So, just how do you prepare for a variety of possible economic tempests, squalls, blizzards and gales? Here’s how, in four steps…
Self-Reliance Solution #1: Take Control of your Personal Income
Research confirms that those who are entrepreneurial-minded are more likely to accumulate significant personal wealth. Simply put, self-employed people and business owners – accountants, lawyers, physicians, the woman who owns a popular boutique – are more likely to be millionaires or multi-millionaires than those who work for others.
Bert Whitehead, a financial specialist and writer, conducted a study which found that only 20 percent of our working population are self-employed or business owners. However, three-quarters of millionaires who work are self-employed or business owners.
Self-Reliance Solution #2: Develop Multiple Streams of Income
Once you have regained control of your own income, you want to make sure that you do not trade ONE job for ONE source of business or self-employment income! You must diversify your sources of income.
Smart business owners diversify their income. Rather than trading dollars for hours doing one thing, they leverage their time and offer multiple products and services, ideally, in a scalable way.
Economic self-reliance also means not relying on one business or investment alone. Many wealthy people own investment real estate (even if it’s not their primary business), receive dividends from participating whole life insurance, and make investments such as tax liens, bridge loans, peer lending, or businesses with which they have expertise. They put their money to use and concentrate on cash flow rather than accumulation.
And the next step separates the self-reliant from the spenders…
Self-Reliance Solution #3: Save Money Like a Millionaire!
Well, according to the work of Thomas Stanley and William Danko which formed the basis of the book, The Millionaire Next Door, many millionaires and multi-millionaires describe themselves as honest and frugal, squirreling away on average more than 15 percent of their incomes every year. Most could live on their savings for 12 or more years at their current standard of living.
But how do you ensure the safety and therefore, durability of wealth? We’ve heard way too much in the past few years about instability in government… real estate… the economy… investments.
Self-Reliance Solution #4: Grow Your Money Safely
Those with wealth don’t rely on luck or subject their dollars to the whims of the market. They don’t confuse saving with investing, or investing with gambling. Investing your dollars is not the same as speculating with them.
Prosperous people don’t hand their assets over to someone else’s control without knowing they can expect predictable, even guaranteed results. And when they pay fees or commissions, they are sure what they are getting. Simply put, the truly wealthy leave little to chance.
Unfortunately, too many people don’t save enough, so they try to make up for their lack of savings by taking larger risks, chasing unrealistic rates of return. They try to “beat the market” (even though the professionals rarely can).
The wealthy choose solid investments over quick-buck schemes or the ups-and-downs of the stock market. They choose consistent savings, solid growth, and the principles of prosperity over market hopes and promises. Often, their portfolios consist mostly of business assets, real estate, and guaranteed assets such as cash value life insurance.
Those who live by the Principles of Prosperity don’t cross their fingers in the hopes that a stock doesn’t fall or that they’ve chosen just the right moment to sell high. No, they spend their energy creating value, which leads to wealth, not worrying about the Dow Jones or the prices of commodities.
Are you financially self-reliant? If not, decide to develop your own financial stability through taking control of your earning power, developing multiple streams of income, saving all you can, and concentrating on reliable investments with known or guaranteed returns. That way, even in times of stormy economic weather, you will find yourself on solid ground.