The Four Things the Wealthy Do to Become Wealthy

By Daniel Felsted

Over the holidays I picked up an obscure financial book in a thrift store called, How to Wake Up the Financial Genius Inside of You by Mark Oliver Haroldson. It was written in the 1970’s and, in general, follows the get rich quick times of today, buy a home with no money down, The first half of the book is peppered with gems that everyone who desires to get ahead needs to know. I recommend adding it to your bookshelf.

The first rule of the wealthy is to save and build capital.

The first gem was a story of a local leader that the author visited with where he recited, “always make a habit of carrying two books, one to read and one to write your impressions in.” Though this is something I’ve done since I got my Master’s Degree I’ve never heard it as concisely put as this. This is a must know philosophy for anyone desiring to increase their financial knowledge.

“always make a habit of carrying two books, one to read and one to write your impressions in.”

The second gem is a financial formula for success.

P+S+I+C=Success (Plan and Save and Invest and Compound your returns)

This is the simplest gem I’ve come across in many years. It encompasses so many of the strategies I’ve written about to help you build wealth in the same ways that the wealthy do.

Make a plan. Save some of your income from each paycheck. Invest what you save into one of the sophisticated investors’ toolkit categories. And continue to do these to compound your growth over your lifetime and for generations to come. Use your motivation, drive and desire to help guide your “financial formula for success” journey.

The third gem reinforces the journey to ever increase your financial knowledge. By continually learning you will reach a point when your brain’s power and knowledge will begin to compound. When that happens, you will be able to fill in missing pieces of your thought process or connect dots that you were pondering on. Combined, reading, studying and sharing what you know and learn help you become more financially savvy and wealthier.

There are at least a dozen additional gems found in this 175 page book but I’d like to discuss the dots I’ve connected in the form of the first four rules of the wealthy.

If your income is your only wealth building resources you must learn to save a portion of it if you desire to build wealth. But you must work out a plan so that you can save some of the money you earn. Your plan may include a side gig which can help you get out of debt and begin to save. Then work your way up to saving 10%-15% of everything you earn from now on.

1. The wealthy save to build capital.
2. The wealthy always add to their capital.
3. The wealthy never spend their capital.
4. The wealthy plan for the generational use of their capital.

Once you’ve saved an emergency fund, start to invest what you’ve saved. See the sophisticated investor’s toolkit below. Add to it each time you receive money. And over time you’ll have a sizable nest egg. You may be tempted to spend this savings, but never spend it. 

If you need spending money, create an opportunity fund. A fund that you add to to use when a good deal comes around like a second car or a long desired vacation with your family. A fund that allows you to never touch your capital savings fund!

The goal is to ever increase the money you have to invest. Below is the sophisticated investor’s toolkit. Ways to invest one’s capital or long-term savings. This list is how you can be diverse in your investing strategy. 

You can easily start saving by adding money to an investment account in the stock market and a portion into commodities until you find an opportunity to invest in rentals and or a business that can produce regular passive income. 

When you’ve built up multiple income streams, always take that income and reinvest it for your retirement and future generational use. Never spend your capital.

The Sophisticated Investor’s Toolkit
1. Invests in businesses. Passive income
2. Invests in rentals. Income producing real estate
3. Invests in the market. Liquidity
4. Invests in commodities. Gold/silver/oil/royalties/Intellectual property rights/etc.

I hope that this article has given you some food for thought. I always love picking up new-to-me books. I am amazed at the things I’ve learned over the years. They have helped educate me on my financial journey and I’ve learned how to compound that learning to make me and my family more financially savvy.