Putting It All Together…On the Path to the Next Phase (2)

My meeting with my Billionaire Friend was a short one; it was essentially a review session and we went through the entire project and looked at the feedback from the readers. My friend confirmed we needed to move to the next phase but that would require a recap of what we have done so far to put people in the picture again. So here is the second set of recaps. Enjoy.

5. THE ESSENCE OF WEALTH BUILDING IS MORE IMPORTANT THAN WEALTH ITSELF (2)

“It takes generosity to discover our essence through others. If you realise you are only a violin, you should open yourself up to the world by playing your role in the concert ” – Jacques Yves Cousteau

Martin Seligman has found a meaningful life central to making human living more purposeful and beneficial to oneself, others, society and the nation. Seligman’s thesis was that; the essence of acquiring wealth is not being limited to building wealth for wealth’s sake alone, but about using the wealth built and the process of building the wealth for the pursuit of happiness for one’s self, family, non-family members, one’s society, and one’s nation.

Life is not just about surviving. Life is not just about living but making impactful contributions to the lives of others in need, one’s society and nation, in line with the philosophy of positive psychology. It is about deriving authentic happiness from giving inspiration to our immediate environment, giving them happiness, and letting subordinates love the experience of living. This is the very essence of positive and meaningful living.

The truth is, the essence of building wealth is more with deriving happiness in habitually giving unto the needy others, from the wealth possessed and not in holding wealth, solely for oneself and family. From experience, the philosophy behind habitual benevolence, as in the school of positive psychology, has been found to bring soothing happiness, and deep satisfaction, and inspires me to continue to do more.

Always remember that the pursuit of building wealth is a lifetime process. You do not build wealth and stop; you continue to build wealth all your life. However, as you build wealth, you use wealth to make others happy and not only one’s self. Positive wealth-builders build wealth and pursue such wealth as a lifestyle, but still make it a duty all their lives to give and give to society and others, to spread happiness, love and joy to others. So, holding onto wealth is not evil. You hold onto wealth to use it as working capital to build wealth. However, part of the wealth built should be used for others, to spread happiness, joy, give inspiration and build others into wealth builders”.

6. TO BUILD ENDURING WEALTH, YOU MUST IMBIBE THE HABITS OF WEALTHY PEOPLE

1. INFORMED WEALTH BUILDERS BUILD WEALTH BY SAVINGS FROM ACTIVE INCOMES INTO PASSIVE INVESTMENTS.

This habit is generally recommended to employees to build wealth through committed regular and consistent savings from active incomes in their life employment journeys. It calls for setting aside and regularly adhering to some predetermined percentages of active employment incomes for regular savings into building wealth. I consistently decided to use 20% of my active employment income to grow my wealth. This differs from the generally recommended percentage of 10% of active revenues, as in the “ Richest Man in Babylon of George Clarkson, who planted this habit in me from 19 years of age”.

2. INFORMED WEALTH BUILDERS MUST, AS OF HABIT, ORGANISE THEIR FINANCES.

Generally, wealth building requires proper financial budgeting, planning and organisation. Systematically creating wealth requires regular financial planning and monitoring possible deviations from set personal budgets, placements and investment returns. This is absolutely necessary. Hence, financial maps must regularly be drawn to ensure that expenditures and savings are kept in line to build wealth. Financial maps must be regularly drawn to guide spending habits from deviations away from set financial and budgetary plans for building wealth. As of habit, my set wealth-building goals are mapped ahead of every year towards guiding me and keeping my eyes on the ball during the year. This is important for wealth builders to keep them in check from budgetary and financial deviations. It has greatly worked for me.

3. WEALTH BUILDERS WEIGH EVERY INVESTMENT OPPORTUNITY COMES THEIR WAY BEFORE PLUNGING IN

It is necessary always to weigh the opportunity cost of every investment decision. For wealth builders, this ensures that costs are properly considered in terms of expected possible returns and associated costs vis a vis other available investments.

Opportunity costs must be weighed with every wealth-building decision for minimising investment losses arising from poor investment decisions in the continuous utilisation of every savings made from active incomes into building wealth”.

4. WEALTH BUILDERS PLACE GREAT VALUE ON THEIR TIME.

“It is commonly stated that “time waits for no one”. For wealth building, time is of the essence since wealth-builders are mere mortals, who would eventually die, no matter how long it may take. Hence, wealth-builders must optimise their time management to avoid unnecessary time-wasting activities. Time-wasting activities should be curbed for the habit of gathering knowledge, reading, learning and relating with mentors to assist them in building wealth. Wealth builders need to form the habit of placing premium value on their time management because the same finite time is available to everybody but gives the best results to those who optimally utilise the value of time. As of habit, it is those who use their time wisely that from its use”.

5. WEALTH BUILDERS AUGMENT FAILURES IN THEIR INVESTMENTS WITH CUTS IN EXPENDITURES.

We all fail many times with some of our decisions. No human is perfect. However, wealth-builders must regularly augment their investment failures with sacrifices of cuts in their expenditures. Investment failures would occur, but wealth builders must adjust to regularly augment such accrued losses with spending that would augment such losses and use such discoveries to cover the investment losses. It is also important for wealth builders to always prepare against the worst with their investments. Wealth builders must identify possible problems/failures that may arise and plan ahead against such failures. In doing this, wealth-builders must take up insurance policies to cover possible losses/failures. This is very vital. They must anticipate the worst when building wealth.

Towards this end, wealth-builders must obtain insurance covers for their health, property accidents, fire, etc. Appropriate insurance covers must be taken regularly to protect wealth builders against the worst that could happen and which usually happen. They must organise their finances regularly to provide insurance that will protect them against foreseeable failures. All possible mishaps must be identified and anticipated, with preparations made against them, by taking up insurance policies, putting in place many required protections and making necessary decisions to protect their accumulating and build wealth. While in paid employment, I started with fire insurance cover, over even the contents of my rented accommodation but have since graduated my insurance cover over many necessary others”.

 7. TO BUILD ENDURING WEALTH, YOU MUST IMBIBE THE HABITS OF WEALTHY PEOPLE (2)

There is precious treasure and oil in the house of the wise [who prepare for the future], but a short-sighted and foolish man swallows it up and wastes it – Proverbs 21:20

WEALTH BUILDERS DO NOT SPEND FLAMBOYANTLY TO IMPRESS

Wealth creators must train themselves to resist the urge to spend extravagantly. Wealth builders must constantly keep their investments and savings goals as their main priorities. The typical characteristic and practice of affluent individuals and those committed to accumulating wealth is frugality. The only exception to this rule is spending on necessities of life. Given the size of Nigeria’s population, the percentage of savings and investments in the country’s gross national income is noticeably very low. This is due to the typical tendency of people to party and spend money on consumptive expenses.

AS EMPLOYEES, YOU MUST PLAN FOR YOUR RETIREMENT THE VERY FIRST DAY YOU ARE EMPLOYED

Employees must plan for their retirement from the very first day of their employment to better prepare them for their future and begin to build wealth for their own good and the good of their families and society. I once observed a discussion between a 60-year-old and a 32-year-old man. The 32-year-old man asked the 60-year-old what he would do when he retired. And his answer was surprising that he had not thought about it. Of course, the 32-year-old man expressed shock as to how a 60-year-old man had not planned for his retirement. The 32-year-old man then went ahead to spill the various things he was already doing towards his retirement by age 55 (some 20+ years ahead). The 60-year-old man then asked the younger one why he planned to retire that early. The younger man then told him that retiring early is what those who plan their lives very well generally do. Employees should not wait to retire at 60. They should plan to retire early, from age 50 or at the very worst, by age 55. Of course, the only way this can be achieved is by planning their future from the first day they commence paid employment.

WEALTH BUILDERS EDUCATE THEMSELVES BY READING VALUABLE BOOKS AND APPLYING THE  INSIGHTS IN THOSE BOOKS

In the last series, we gave examples of the books read by Aig Imoukhuede, Yemisi Shyllon, Warren Buffet and others, which ignited their wealth-building drive. Another book that comes to mind here is a book by Robert Kiyosaki titled: “Rich Dad, Poor Dad” and “ Rich Dad’s Cashflow Quadrant”. In these great books, Kiyosaki discusses this issue very extensively. He came up with a four-quadrant illustration of the different classes of engagements for earning income by humans. The first quadrant discusses the employee stage of life, the second discusses self-employment, the third discusses business systems, and the fourth discusses investment planning. Those who have their eyes on investment at every stage of their life, whether self-employed or employees, should be operating in the fourth quadrant of investment in preparing well for their later lives. And in doing this, they must always, as of habit, avoid eating with all their fingers.

WEALTH BUILDERS WHO ARE SELF-EMPLOYED ALSO SET EXIT TIMES FOR THEMSELVES

Self-employed people should aim to disengage early from being self-employed by the age of fifty-five because being self-employed could be very stressful and exhaustive. The self-employed solely shouldered all the risks, benefits, burdens, decisions, operations, policies, etc.,   associated with self-employment. Therefore, such self-employed must create a plan to move away from their self-employment early to build their firms into business systems. Business systems are defined, in the book, as those businesses owned by business owners who, on leaving and completely detaching themselves from their businesses for over one year, can return to find their businesses doing better than they left them. They are those who are regarded as having built successful business systems. And those who build business systems have their eyes on the ball of investments. Investment is the ultimate in money-earning, and wealth-building instruments should be the ultimate goal of every human.

YOU SHOULD LEARN BY OBSERVING THE WEALTH-BUILDING HABITS OF WEALTHY PEOPLE AND APPLY THE SAME

In general, by observing wealthy people and those who build wealth, one tends to understand how to build wealth. This is the first step to building wealth; from nothing. One has to understand how to build wealth, orient oneself with an understanding of the rules of finance and investment and build wealth over time by regularly tracking one’s wealth.

Wasteful expenditure must be avoided at all times. This is a very important habit with wealthy people. They discipline their spending. You will find, for instance, that Aliko Dangote does not share his wealth, Mark Zuckerberg came to Lagos wearing a T-shirt, and Bill Gates wearing ordinary clothes. Whereas ignorant ego-infested people go around town showcasing their gold and diamond possessions. Such wealth-displaying behaviour and ostentatious lifestyles are not part of the discipline and habit of wealthy people and wealth builders. Wise and wealthy people are conscious of the importance and value of money and do not spend frivolously

8. SUCCESSFUL WEALTH BUILDING REQUIRES PRECEDENT ACQUISITION OF BASIC FINANCIAL KNOWLEDGE.

WHY SHOULD A PERSON ACQUIRE FINANCIAL KNOWLEDGE?

In wealth building, we must be guided by basic knowledge of finance and seek to commence our wealth-building process with some good financial literacy to develop the ability to understand and effectively use financial skills for wealth building.

Knowledge of financial skills considerably helps to build and sustain wealth. This includes understanding the basic elements of budgeting, credit management, financial management, insurance, credit/interest management, the intricate issues of risk and return trade-offs with investments, understanding the time value of money, and analysing return and opportunity costs.

It involves a good understanding of how to handle cash better and manoeuvre between the currencies of different nations while engaged in the process of possible international transactions during wealth building. It also includes preparing and better positioning for wealth builders’ banking interactions and, as of prime importance, avoiding making poor financial judgements and decisions while building and sustaining wealth by wealth builders.

HOW DO WEALTH BUILDERS ACQUIRE FINANCIAL KNOWLEDGE?

One is tempted at this stage to ask how wealth builders acquire the basic financial knowledge discussed here since not all wealth builders must necessarily have studied finance, investment, and economics in school. A medical doctor, fashion, designer, etc., who are without solid education in financial management, but who can still acquire the basic financial knowledge discussed here, as follows”:

1. ENROLL ON SHORT COURSES

Many of us have read the CV of Peter Obi, the former governor of Anambra state and current Nigerian presidential aspirant. His CV contains a long list of short-term courses that he has taken at Harvard, Oxford, Cambridge, etc., for systematically and continuously acquiring knowledge in short-term courses to build his wealth and solid reputation. The same goes for many successful wealth-builders like Aig Imoukhuede, as discussed earlier in this series, for building his Access Bank group with his partner, Herbert Wigwe. In building their manageable wealth, the same goes for Olusegun Osunkeye, Prince Yemisi Shyllon, Tony Elumelu, Seun Adetu, etc. They are all known to have enrolled in short-term courses at many institutions of repute to acquire knowledge and build wealth”.

2. GET A MENTOR OR EXPERT TO ADVISE YOU

 Another way wealth builders gain the financial knowledge already exposed here is to learn from experts, asking them critical questions, which develops them. Wealth builders should not be shy from identifying mentors who can assist them in acquiring basic financial knowledge to help them build and sustain wealth.

3. READ FINANCIAL JOURNALS, SEMINARS, NEWSPAPERS AND MAGAZINES

Another method for obtaining basic financial knowledge is generally via newspapers, journals, seminars and magazines. Many seminars are available for acquiring basic knowledge of financial and investment management. This can be sought out on Instagram, the internet etc., etc. Wealth builders must also get familiar with financial tools and apps available via information technology platforms. This is an all-time tool that wealth builders can acquire towards enhancing and sustaining their wealth.

Can’t wait to catch you next week.