Forming the Required Financial Mindset

This is the most important post in the entire series on becoming wealthy. Without the right mindset you will fail. It is that simple. You cannot 'scrape by' in wanting to get rich, you need to go all out for it.

In order to motivate yourself, you need to ask yourself why you want to be rich. Is it the 'enviable' lifestyle that the wealthy posses? Is it so you can spend more time with your family? Is it because you want to give back to society? Determine the fundamental reason why you want to become wealthy and this will guide you through the tough times ahead, keeping you 'in the saddle' when the going becomes tough.

My own personal motivation for wanting wealth is to free up my time to work on projects that interest me. Right now, I'm nearly at this reality as I have both a business that I'm building and a steady stream of very interesting contracting work that ties in well with the first business. Figure out what matters to you and then keep it at the top of your mind every time you think about buying that expensive watch or signing up for that gym membership.

Once you have a means of continued motivation, you need to start to undoing all of the damage that Western society has done to your perceptions about how finance works. Most people never get beyond a monthly post-tax paycheck (if they're even that lucky), which will almost certainly be less than their monthly expenses, none of which they are tracking or measuring. This is financial reality for the vast majority of the world. Do not think like this, for you will never become wealthy with that mindset.

Instead you will need to focus your energy on measurement, research, learning and optimising your financial affairs. You will become intimately familiar with topics such as macroeconomics, entrepreneurship, taxation, debt, equity, corporate valuation, accounting, asset classes and financial markets. Knowing all of this will give you the edge you need to become extremely rich. All of the information is out there and easily available. In the remaining articles I will go through briefly all of the topics that you should be aware of and how to gain more knowledge on each individual area, both from this blog and from extra sources.

The following paragraph is the most important principle to learn in regards to gaining and maintaining wealth:

Produce or acquire assets that provide a persistent recurring cashflow in a manner independent of your time.

Once a sufficient quantity of assets have been acquired, the cashflow will exceed your monthly expenses and at this stage you will have essentially 'retired'. You will not need to exchange your time for money, rather your assets will do the work for you.

This is the most important financial lesson you can learn.