A mate and I were on a bike ride recently when he asked me, “What’s the best way to get rich?”
I’ve thought about it and broken it down to four key steps.
First of all, if a good process already exists, use it!
Most of you will have heard of my grandma’s spaghetti Bolognese. It is awesome. She’s spent 25 years perfecting the recipe, adding a little bit of this and that to see what works and what doesn’t and the end result is great!
So when I’m making spaghetti Bolognese, is it smart for me to try and do it myself and come up with something that might be just as good as Grandma’s or take the lazy way and follow the recipe and come out with a great result first time? I think it’s the latter.
My point is, when trying to get rich, talk to people who have done it. Not only are they going to have years of experience that they can impart on you but can also help you mitigate risk through sharing the mistakes they’ve made. I’ve made mistakes during my property investment journey, I’m sure Al and Cam probably have too, that’s how we create a proven process.
Keeping with the cooking theme, you’ll probably come across some old-school experts like Grandma with her spaghetti Bolognese and some super talented amateurs, like on Masterchef.
The talented amateurs start out like bulls to the gate, they follow the recipe to begin with and then they get a bit flustered. When they start running behind time, they lose focus and they stray from the recipe. Those who stick to the recipe generally end up with a much better result. So follow a proven process. You don’t need to be creative with this stuff. The proven path is super effective and super boring, which means almost anyone can do it!
The third step is to be patient and disciplined. I’m really glad my mate didn’t ask me how to get rich quick. The reason most people don’t achieve financial freedom is because they want it yesterday.
About 12 months ago I had a conversation with a Queensland based client who told me he’d had as many as seven investment properties in the past. He told me about how he’d sold them and the lost opportunity. I could hear the disappointment in his voice and I said to him, “Please tell me that you didn’t sell these properties in 2000?” He said, “No, I sold them in 1999”.
Between 2001 and 2004 the Brisbane market went bananas, it rose by more than 100 per cent. He’d held his properties for seven or eight years, thought that was long-term, got frustrated and impatient and sold. If he’d held them for another three years those assets would have easily doubled in value and he would have been financially secure today. So be patient and stick to the process.
The final step is along the same lines; prepare for delayed gratification. You have to make sacrifices to achieve this. Successful wealth creation, however you do it, is not about getting rich quickly. You need a process which you can commit to in the long-term. Many of your sacrifices will be made at the beginning of the process when you are saving for your first deposit. The first property is the hardest.
Cam talks about how he sold his car and rode his bike to work every day for 12 months to be able to get his first property. I took a bit of a shortcut and asked Dad for 10 grand. I was disciplined and paid that off over the following 12 months.
So if you are like my mate and are wondering how you can get rich, there are four key steps:
- Talk to successful people
- Follow a proven process
- Be patient and disciplined
- Delay gratification to get started
If there was a fifth step it would be, take action. It is very hard to get rich if you do nothing.