If you want to improve your financial situation and find success with money, you need a plan. In this post, you’ll learn about the first steps to wealth, what you can do today to get into better financial shape, and how you can get on the path to financial freedom.
Are you looking to find success with your money? Do you want to achieve financial success and get into better financial shape? How would you feel if you had a little more money in the bank?
Becoming wealthy and improving your financial situation might seem confusing and difficult, but with the right plan, you can grow your wealth.
In this post, you’ll learn about the first steps to wealth you can take today to start having more money over time.
After reading this post, you’ll have learned actionable steps to build wealth.
One thing I want to say before we start though is becoming rich fast or becoming rich quick is not what I’ll be talking about.
No one becomes a success overnight. Becoming wealthy is no different, and it might be months or years until you become rich.
However, every journey starts with a single step, and in this post, you’ll learn how you can take that first step to financial success and having financial wealth.
First, before discussing the steps for building wealth and having more money, I want to ask you a question.
What Would Your Life Look Like If Money Wasn’t a Problem?
First, before laying out a financial plan for you and talking about the steps to building wealth, I have a few questions for you:
What would life look like if money wasn’t a problem?
A pretty simple question, but an interesting one. What would life look like if money wasn’t a problem? I want to get you thinking about this because what I’ve experienced is that when you have stability with money, you can live a great life.
For you, if money wasn’t a problem:
How would you feel? How would you spend your days? What are your dreams, and could you reach them? Would you have the same job? Live in the same house? Take the same vacations?
I wanted to start this post out with these questions because I wanted you to start thinking BIG.
Personal finance is a BORING subject, but if you attach it to your goals and dreams, you can make amazing things happen with in your life.
What would life look like if money wasn’t a problem?
Got your answer?
Great!
Now, let’s get into the meat of the post, and the first step to wealth.
The First Step to Wealth and Having More Money
The first step to wealth is to make a conscious decision that you are going to become wealthy.
You need to make a decision today which will impact your entire live.
Today, you are going to start on the path to wealth and being good with money.
With this decision comes a responsibility to yourself to take care of yourself, your family and be good with money.
The first step to wealth is making a decision you will be good with money.
However, saying “I’m going to become wealthy” is great, but if you don’t actually believe you can do it, then what good will this decision be?
So many people make goals and decisions, but after a few weeks, the excitement is gone and you are back to the same place in life.
Making changes in life is tough without the right mindset and focus.
How can you change your mindset to set yourself up better for success in life?
For me, I’ve been able to change my life most effectively after changing my mindset and mental make-up with affirmations. With money affirmations, you can change your mindset to get on the right path mentally.
How to Use Money Affirmations to Improve Your Mindset Financially
Before getting into any tangible and concrete steps for improving with your money, it’s important to believe in yourself and get in the right head space to achieve your financial goals.
Mindset is so important.
Having a strong mental game is as important as having skills and talents. Positive thinking has proven, time and time again, to lead to more success than negative thinking.
With positive thinking, you can alter your reality and become the person you want.
Similarly, if you think negatively, you will not become who you want to become.
With regards to money:
- If you tell yourself you aren’t good with money, then you won’t be good with money.
- If you tell yourself you will always be in debt, then you will always be in debt.
- If you tell yourself you will never become rich and wealthy, then you never will become rich.
These are negative thoughts and will not help on your path to creating wealth for yourself.
Instead, we need to use affirmations such as the following to cultivate positive money thoughts for ourselves.
Right now, I want you to read out loud the following affirmations:
- I am good with money.
- I can make good financial decisions.
- It’s possible for me to save money.
- Debt will not consume me and I can destroy my debt.
- It’s possible for me to learn more about personal finance.
- I can become wealthy over time.
Now, write these affirmations down, or come up with your own money affirmations, and each morning, read these aloud to yourself.
Over time, you’ll start believing that you can become wealthy, and with this belief, you can accomplish your money goals.
Now, let’s get to what you can start doing today which will have an instant impact on your personal finance situation.
The Second Step to Wealth and Finding Success with Money
The second step to building wealth, after making the decision you are going to become wealthy, is to start tracking your money.
Do you know how much you are spending each money? Do you know how much money you have after taxes? Are there any expenses you could cut to save more money?
One of my favorite quotes is the following:
What gets measured, gets managed.
If you don’t know where your money is going on a monthly basis, how will you know what to change for improvement?
Knowing where you are financially is so important for financial success.
Tracking your income and expenses is the most important step to building wealth.
There are potentially hundreds of financial metrics you could track, but there is beauty in simplicity.
The 4 metrics I believe you need to know for personal financial success when it comes to understanding your finances are:
- Net Income
- Gross Expenses
- Savings Rate
- Net Worth
First, you need to know your net income and gross expenses.
Net income is how much you made in income, after taxes, for a given period.
Net income is what you see in your bank account after your paycheck is deposited.
Next, your gross expenses is how much you spend on things throughout a given month.
These gross expenses are things like food, transportation, housing, insurance, travel, shopping, child care, home improvement, debt payments, etc.
For me, I like to break down these further to get a more detailed look at my spending:
For you, you can make this as high level as you want, or as detailed as you want. The main point of this exercise though is to understand where you money is going each month.
Next, we have your savings rate and your net worth.
A person’s savings rate is the percentage of income which a person saves in a given time period.
Simply put, your savings rate can be calculated as (net income – gross expenses) / net income.
Finally, we have net worth.
What is your net worth?
It is your assets minus your liabilities.
What are assets?
Assets are things a person owns which have value. Typical assets include houses, cash, stocks, bonds, cars, precious metals (jewelry, etc.), currencies, businesses – and the list goes on and on.
Next, what are liabilities?
Liabilities are things a person owes, either to a bank, a financial institution, or another person or business. These include credit card balances, mortgages, auto loans, personal loans, liens – and the list here goes on and on as well.
To calculate your net worth, subtract your liabilities from your assets.
With these four personal finance metrics, you will have a complete snapshot of your financial situation.
But now, how do you actually get these pieces of information?
How to Track Your Personal Finances Each Month
Tracking your personal finances is all about being organized and knowing where your money is going on a monthly basis.
The first spot I look is at my bank and credit card statements.
My monthly bank statements will show me all of my expenses, and give me an a complete picture of where my money is coming from, and where my money is going.
Next, you should categorize your spending and calculate the different metrics we discussed in the last section.
Finally, you need understand the details around your savings and debt accounts, i.e. what are your interest rates, what are the minimum payments, and are there any fees associated with these accounts.
While this sounds like a lot of work, there are some tools and softwares you can use to make this easier.
For example, some common personal finance tracking tools include:
Some of these tools are free, some are premium. Of course, you can always make your own spreadsheet or keep a notebook 🙂
Once you have your numbers, now the real improvements can happen.
Tweaking Your Budget and Spending after Calculating Your Expenses
Once you have your numbers, now you can start doing analysis on your spending habits.
For example, let’s say you tally up all of your expenses and you notice you spend $1300 a month on food for your family.
Is that $1300 a good use of your money? Do you value eating food and think $1300 is right for your family, or is this too high?
The true power of the quote “what gets measured, gets managed” is in the second part of the quote – the management.
If you have a goal to save $500 more a month, and you now know you spend $1300 on food, could you cut $500 out of your spending to unlock that $500?
With this analysis, the possibilities are endless. By knowing your numbers, you can make a financial plan for yourself and get on to improving your financial situation month by month.
Now, let’s get on to the last step you can take today to get on the path to personal finance success.
The Third Step for Wealth and Becoming Wealthy
The final step you can take today is to decide to get educated about personal finance.
In the United States, we don’t learn about personal finance in school, and as a result, we have to learn it on our own in the real world.
Luckily, there is a ton of financial education content on this blog, the internet, and in books where you can further your personal finance education.
Personal Finance Articles and Resources on The Mastermind Within
On this blog, there are a number of great resources you can read and apply in your life to learn more about personal finance.
These articles range from beginner articles to somewhat more advanced articles, but look to cover a wide range of personal finance topics.
Some of these articles include:
- Saving More Money
- Paying Off Debt
- Mindset
- Investing
- Real Estate
By reading these articles, and other articles on the internet, you can further your understanding of personal finance and get on to personal finance success.
If articles aren’t your thing, you can also read books about personal finance.
3 Personal Finance Books to Read for Personal Finance Beginners
I love reading books, and I’ve learned a ton about personal finance from these different books.
The three books which I’d recommend, because of their simplicity and ease to read are:
- The Automatic Millionaire
- The Slight Edge
- How to Think About Money
I’ve included a brief summary of each of these below.
