How to build a high net worth and make yourself wealthy
Have you ever wished you had the formula to build a high net worth? Wished you knew which building blocks to put in place so that you can secure a good financial position for the future? Well, here it is – but please beware, these are only the building blocks, you have a lot of hard work to make sure you have the cement to keep them together and the muscle and discipline to put them in place.
I will share what I recently learned from a video I watched on YouTube. Dan Lok, also known as the king of high-ticket sales, shares a model called the Wealth Triangle. Please check out his video here to see it in context – I will share my take-away from the video and throw in some of my thoughts on this. To get a visual depiction, go check out my video on YouTube.
This must be the most valuable lesson I have learned so far this year. I found that there were parts of this that I had already been achieving or putting in place, but I was unaware and so my actions didn’t make it possible for the outcomes that should be occurring to manifest. I hope when we look at this now, you will already have some of this in place or at least become aware of what you need to do so that you can put this model to action in your life. If you take one thing away from this, all I would like is for you to see that with some hard work, this simple model can make a significant change to your financial wellbeing.
Pillar 1: High-Income Skill
You need to have a high-income skill. What kind of skill is this? Examples could be a consultant, an accountant, a dance instructor, an online marketing coach etc. Basically, something that you have learned and can do independent of a business or other people. Dan Lok defines a high-income skill as one that will earn you around $10 000 per month. In South African terms where I live, that would be around the R100k mark per month. What?! Okay, calm down. Think about this first – if you were adding a lot of value, you had the clients you wantedto work with and you considered yourself one of the top 10 people with your skill in your city or country – what is stopping you from earning that kind of money? Or think of it this way – you only need 10 customers at $1000 each per month, or 20 at $500 each per month. Now that you realise it is actually achievable, let’s go into some detail.
Your high-income skill will give you the ability to work independently of a company and a boss. So now you need to ask yourself if you are working toward this. Wait, first – do you have to work toward this? That depends. The answer could tie into the topic of self-reliance. Are you equipping yourself with the skills to carry on doing what you are should everything around you fail? Can you keep doing what you are if your boss retrenches you? Can you keep doing it if you moved to a new country? You get the point. If your answers are no, then you are risking your financial independence. Give some thought to how you can change this. If you answered yes, then great! So, what does the high-income skill provide and what does it mean for your wealth triangle? It means you will always be able to earn money – isn’t that nice? Security. Should the next 2 pillars fail, you will always be able to start over. It gives you financial confidence. Financial freedom means you have money, financial confidencemeans you have what it takes to get it back if you ever lose it. If you have a high-income skill, you have financial confidence.
Pillar 2: Scalability
This pillar is applicable to those of you who would look at, or are, building businesses with your high-income skill. This means you will now start putting systems, people and processes into place to make more money for you. What is a scalable business? It is one where you can easily expand by bringing systems, processes and people on board. A salon is not easily scalable for example – to make more money, you need more customers. To get more customers you need more salons. You need to do everything over again that you did with the first one and it will cost the same or more to add more salons (building, shopfitting, staff, products, tools etc.). An easily scalable business could be online learning, for example teaching people how to colour hair with online tutorials. To reach a million people on YouTube takes the same effort as it does to reach 5. So, the next step to the wealth triangle is building a scalable business. What does this mean for your financial position? It means you can generate more money, which means higher cashflow. When you are making more money than you know what to do with (be responsible here, this doesn’t include blowing your cash on cars and fancy watches), then go to pillar 3.
Please note – You don’t have to do this bit; the scalable business. You can implement pillar 1 and go to pillar 3 if you choose. Nothing wrong with that.
Pillar 3: Invest
Invest in what? Good question and it is important to follow the list of priorities below. Once you have more than enough cash to run your business and you’ve raised a healthy sum of cash over and above that, then you will look at investing in
- Yourself – is there anything more you need to learn, certifications or courses you can attend to improve your high-income skill further?
- Your business – is there anything more your business needs? Marketing, systems, staff that could improve efficiencies and/or cut costs?
- Property – tangible assets that increase in value
- Shares, fixed deposits, money market accounts etc.
Remember that you want to go for property, shares, fixed deposits once you know you will not need access to your money. Those things will tie your money up. In fact, if you have to consider this, then you haven’t made enough money yet to buy property. You should be fine without the cash that will be tied up when you make this decision. Otherwise, invest in yourself and/or your business.
Here is how each of these 3 pillars makes money:
- High-income skill – You make the money
- Scalable business – People and systems make you money
- Investments – Money makes you money
To close off, don’t be dismayed if you aren’t earning $10 000 per month or you don’t feel like you can earn that. I would challenge you to try plan to see what the best is you can do, relative to your position and start building your wealth triangle. Implement these pillars and do a small exercise – see what it will take to add one zero behind your current numbers. Believe you can add that zero and put whatever you need to in place to make it possible.
Remember, this is not about making you rich or teaching you that the money matters and there must be a Lamborghini in your garage – this is about building your net worth so that you can accumulate the correct type of wealth to live the lifestyle you choose to for as long as possible. This is to build the wealth that will take care of your family, but in the best possible way.
No more excuses! Get going…