This week I want to explore the importance of your wealth creation system.
I have been spending a lot of time writing about the mindset of wealth creation and how it is the most important element for your success.
This week I delve into something that will support you in every aspect of wealth creation, whether it is a mindset, property investing, stock investing, or your own business. That is, the concept of a wealth creation system.
The definition of system suggests that it is ‘a set of principles or procedures according to which something is done; an organised scheme or method’…
This definition provides some insight into the value of a system and why you must have and follow a system if you want to be successful in creating wealth.
The first part of the definition suggests a system requires some principles and procedures that determine how something is done.
One of the things that I learned from studying successful people was that they all adhered to this principle with the utmost clarity.
Richard Branson has a system, Warren Buffett has a system… and nothing they do deviates from their system. I also learned from Tony Robbins that one of the secrets of success with anything, especially money, is to discover the system that successful people use and replicate it. Pretty simple right?
They will tell you, that their biggest losses or disappointments have come from times when they deviated from their system.
Principles and Procedures
Successful investors have developed a set of principles and procedures that they know works for them and they systematically implement the system on a daily basis.
To relate this concept to mindset, I know that successful investors have a set of principles that they believe and practice that assists their ability to be successful… That is how I learned what I now use in my wealth creation system.
These principles will vary for each of us, but they come back to what we believe and hold to be important to us and our impact on the world. For example, Richard Branson has a very strong principle relating to how his businesses treat staff…
To him, staff are the cornerstone of his businesses and if he keeps them happy and treats them well, he knows he will get better outcomes and productivity from his people.
You see him having fun all across the world, and he imbeds that principle of fun in his businesses so that his staff enjoy working for him…
Do you think that has helped him to be successful? Absolutely it has.
The important lesson from the Richard Branson example is that the principle itself has little to do with how he does business, but more about the mindset he creates within his businesses.
So once again we can bring this concept of a system back to mindset…
To be successful and to fully implement the lessons of mindset, you need to be able to develop a system, your system, which sets out your principles and practices when it comes to wealth creation.
The components of your system will concentrate on an understanding of how you react to wins and losses, how you approach certain markets, how your emotions are affected by booming markets or falling markets, and how you respond to these emotions…
Are your principles and procedures in your system structured for you to be successful?
Wealth Creation System Components
The second part of the definition requires that your system contains an organised scheme or method.
This is relatively straight forward for us to understand, a system requires us to follow a method, simple right?
If we look at Warren Buffett, he is a shining example of somebody who has a method and has applied the method methodically for many years of success…
He looks for companies that are cheap, that is, they are trading below their true value, and he buys them at a discount to their true value.
There are more components to his system, such as the management, the industry, the growth potential of the company and industry, and his understanding of the industry.
Each of these components represents his principles and he has developed procedures for each that when combined form his method for investing.
And history shows that he has been extremely successful at applying his method to build massive value for himself and his stockholders.
In recent times I have been hearing a lot from you that debt is a problem you are facing when contemplating wealth creation.
I’ve previously explored the mindset of debt in some detail…
The concepts of your wealth creation system and debt lead us to the first and most important system that you should have… your money management system.
I introduced this subject previously here…
You need to know where your money comes from and where it goes, it’s the simplest of systems but the most powerful.
Before you can expand your wealth creation activity to other areas, you need to have this basic level of wealth creation nailed…
If your first wealth goal is to get out of debt, then you must take the actions required to make that happen, and it starts with living below your means and managing your money.
Once you are ready to expand into other investing activities, such as property or stocks, it becomes even more important to have a system.
But without these fundamental initial steps, that is your mindset system and your money management system, you will struggle to succeed in these other asset vehicles.
Where to Start
Most people can’t start with their own system, and I will let you in on a little secret, Warren Buffett didn’t start with his own system either…
He spent time studying successful investors and understanding what made them successful. What worked for them and what wasn’t so successful.
Over time he adapted what he learned and applied his understanding and experience to come up with what is now ‘his’ system.
This is something you will need to do as well, especially if you are just starting out…
The good news is there are people out there who have done it all before you, seek them out and learn from them.
By looking at what others have done you can develop ideas, principles and practices that work for you and they can become the cornerstone of your wealth creation system.
I have mentioned before that I have spent 20 years studying the wealthiest people in the world, I’ve looked at what they do and adapted it to create my wealth creation system. You can do it too, only faster and more effectively…
I have combined what I learned about money management into a short course that teaches you what I do to manage my money. It’s called the 5 Steps to Financial Freedom. If you want to bypass the 20 years of research and access the resources that I use, grab yourself a copy of this short course. In a matter of hours, you can take control of your money and be on your way to securing your financial future, simply and effectively.
Leave me a comment below and let me know what you are doing to build your wealth creation system.