The 1st step in becoming wealthy is...

The wake up call was when working as a Plumber and you would see the older above 55 age Plumbers stumble around the building sites most with "sfa"in the safe,then you have to ask yourself who becomes wealthy because a high number of Australians live week by week and because of lifestyle never will accumulate streams of investments outside their super,unless they fall into a inheritance ..
Plus if you want to read a good book about this,then find a copy that was once on the new york times bestseller list in 1998 called The-Millionaire-Next-Door,the surprising secrets of America,s pre "GFC" that it takes discipline -sacrifice -and hard work..

 

They must have missed the 2nd step of getting wealthy - spend less than you earn and invest the rest.

 

First step - taking responsibility for your own actions.

Until you can be honest with yourself you'll go no where. Case in point, every time you see a property or financial success story on Facefail there are always hundreds of comments from people why this can't be done or that can't be done, just full of excuses. So for me first step is saying you won't be like that and accept that you alone control your destiny.

 

Wealthy does not equal happy
Its about striking a balance between the two.

But to do that, you need to understand yourself.
This is what I was taught and something that I believe in strongly

知己知彼 百戰百勝
"If you know both yourself and your enemy, you can win a hundred battles without a single loss. "

(Though it appears that this was actually the incorrect saying all along)
Quotations in The Art of War

 

There are only two parts to the equation at the first step

1) Earn More
2) Spend Less

Where you place the difference is the second step

 

One of my earliest mentors said this to me I'll never forget. " Basically you suck. You wanna do better? First recognise this, then go and change it".

I've always valued mentors being blunt with me. Way too much fluff out there being told to people to make them feel better, but change rarely happens.

 

Depends who you ask.
As there is a general minimum cost of living, those on below average incomes would struggle to spend less.
The only option to accumulate excess funds is to earn more.
Earning more should always be the first step in my opinion.

It's like giving to charity or ongoing donations, once you regularly give, you never notice the money.
Why not use the same principles to give to oneself?

For those who are on huge incomes with next to no savings, they have a savings problem, or simply don't care and want to enjoy life.
What would be better?

1. A person with huge earning capacity but undisciplined with savings.
2. A person with low earning potential, but can save some of their income.

Remember, you can't take your money with you when you die....

 

But I have noticed that the wealthier I am becoming, the better quality of happiness I am experiencing.

 

I agree. Take away 50% of the wealth people on here have and then watch what happens to their level of happiness

 

Still only two parts to the equation in the first step.

Different people in different circumstances will have the ability to get more out of maximising one half, you have already identified which people should work of which part above.

I do agree earning more is a better focus as it has no ceiling while reducing costs can only go so far. Not to mention all the other benefits for borrowing etc.

 

I still think learning to save just makes the increased income have a compounding return.

As with the example of the people on 300k with no savings or wealth, they could increase the income to 500k and not change the equation. A person who learns how live on 45k and how to budget, save and live within means then just gets exponential returns from increasing their income as they've set the expenditure side of the equation in place. A person who hasn't established that part will just see that side of the equation grow equally to the income.

Increasing income is the long term key and has the exponential return capability but it's still the second step for most people.

 

Which means you've found a balance.
You could easily cut a lot of your expenses, but you would probably be miserable as hell.

 

I believe I have always had it in balance. Even when I was a poor Uni student in the 1970's living on Tertiary Allowance, I was happy, in fact very happy. From memory, our Allowance was $29 per week, Bundy Rum was $5 for a 750mls bottle, we didn't have a care in the world (except for the odd exam here and there), ...

My motto is "Life is too short, not to be happy".

Probably not. My wife and I live a pretty simple and frugal lifestyle, most of the time. Being retired and financial independent means we can do the things that we want to do. For me, part of this means I can do volunteer work for once-off events such as the G20 and Asian Cup plus I can do regular gigs for charities such as Leukaemia Foundation and Angel Flights. I couldn't do these when I had my business. I get immense pleasure from these activities.

On the other hand, we do splash out occasionally. Going to the Rockies and Alaska in 2014 is a case in point. Going to Wimbledon and the Ashes Tour last year is another. Going to Vietnam, Cambodia and Laos this year is a third. And we do NOT travel backpacker class. I get immense pleasure from these activities as well.

 

So aren't we talking about the same thing?
If you were super tight, you wouldn't splash out at all and save even more money and be even wealthier... but that wouldn't bring happiness.

 

The first step in becoming wealthy can vary according to people's situations and experiences. Some may become wealthy due to an inheritance, windfall, etc.

For others who have built their own wealth, I think the first step is probably deciding they want to improve their financial situation. Possibly driven by a goal, for instance, the desire to be financially independent. (Like many of us on PC).

Further steps may involve making a plan, and taking action, along with personal characteristics of persistence, patience, creativity and determination to achieve their goals.

 

Ask papa for some money; )

 

I agree the reason many become a slave is because they are increasing debt and not increasing cashflow, it's the treadmill to nowhere

 

Haha that's so funny. Yes the key to being wealthy is to make more money. Lots of books around mindset, crystal balls, going for a run in the morning - so much nonsense. The only people making money is the author.

 

'Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent.'

 

spot on