How A Self-Made Millionaire Manages One Dollar
The Wisdom Man
If you have no idea how to handle a million dollars, I guarantee that the money will evaporate if I wrote you a large check right now. Precisely like 90% of lottery winners that go bust within five years, they didn’t have the discipline or the methodology to handle the money that would have established a financial foundation that would endure for generations. Therefore learn how to manage a single dollar so that you can move up the economic “food chain” from wherever you start.
To clarify in this article I’m only discussing someone who has become a millionaire on their own and didn’t inherit their wealth. Why? Only because the mindset of a person who did not come from wealth, and didn’t somehow come into a “windfall”, are generally very different. Now back to our topic.
Hand a self-made millionaire a dollar, and they will do something for certain: They will show the discipline not to spend it unnecessarily. That dollar will be put to work or deposited into a savings account where it generates interest income. A self-made millionaire does not frivolously spend earned income! They only spend the income from their investments and try to do it wisely. This type of millionaire repurposes money from a job, bonus, overtime pay, etc., into investment activities and accounts. When you are first starting out, you most likely don’t have any investments or business income, so how are you going to pay bills? Therefore reject the advice: “Try to save some money after you pay the bills each month.” This rarely happens and probably will be too little to add up to much. Besides, The saying is psychologically backward. The better advice that I want you to use is: “Don’t invest all of your income every month, pay a few bills with it instead.” See the self-made millionaire mindset difference?
Let’s talk about building a financial foundation. Give a self-made millionaire a dollar, and they will split it up into the distinct building blocks of a sound financial foundation. First, ten cents of that dollar will be allocated to a permanent investment account that is never spent. This account is your wealth builder! As I have stated before: “Wealth is only created and maintained by the amount of money that you receive and do not spend.” Well then, this is that account, and you need to increase it by a percentage of every dollar that you earn. Second, another ten cents will be allocated to a traditional savings account. This is a delayed spending account for expensive purchases such as home remodeling, vacation, repairs, or cars.
Self-made millionaires save money to buy something before they buy it when possible, not afterward on credit where you have to pay interest. Third, take ten cents and allocate it to wealth education. Why? Because the economy is always changing and you are responsible for managing your money. The only way to approach this wisely is to increase your investment knowledge. Get investing ideas by getting training, professional advice, books, courses, newsletters, magazines, etc. The three “tens” that were just allocated for different purposes is the wealth formula of self-made millionaires; this is how money can be created to last for generations. It is only after these three buckets receive their share of the dollar that another part of it is allocated to taxes on that dollar. Notice that a self-made millionaire pays the tax collector after the important buckets get their portion.
Also, forget the myth known as “income before taxes.” There are taxes on any income from whatever source. So a self-made millionaire will have a tax strategy in place to receive that dollar before it is ever deposited at the bank. They don’t overpay their taxes. Instead, they manage tax obligations because they are your single biggest expense (Add up how much you paid in income tax to the IRS, state, city, and property taxes and most likely it is a much bigger number than expected). Some ways to minimize your tax obligations include creating a part-time business to generate legitimate deductions, acquiring investments that provide depreciation like real estate and oil, and working with the best CPA, you can afford, to give you advice.
This type of millionaire manages a dollar formula that self-made millionaires follow: minimize the tax obligations, allocate parts of it to build your financial future, decrease the percentage of earned income that you spend until it is near zero, and forge the discipline to consistently follow this routine. Now, ask yourself when you should begin implementing these ideas? The correct answer is: right now!
About The Author
Theodore Henderson works with business owners, entrepreneurs, and corporate professionals. He is an Amazon best-selling author, a Certified Career Coach, a Certified Leadership Coach, and a Certified Social Media Security Professional Powered by CompTIA. In addition he is the author of the business program “Launching Your Great Business Idea,” as well as the author of the following books; “The Wisdom Compass”, “9 Simple Strategies to Becoming A Strong Leader” and the Security eBook “30 Smart Ways to Protect Yourself from Cyber Criminals” aimed at owners of Smartphones, Mobile Devices, and also those who have significant online activities including Social Media, financial services, etc. He is available for keynotes, seminars, and workshops. He may be reached through www.TheodoreHenderson.com.