Why do people fall off the Forbes list “the world’s billionaires”? Backtrack a bit more, and you realise that over 70% of the names previously on that list are no longer there 20 years later.

So what goes wrong? Possibly nothing. But it’s a reminder that staying rich can be far more difficult than becoming rich in the first place.

How is that possible, you think? Surely people who have money will make more money?

Not quite. You see, making money from money requires three things –commitment, discipline and forward planning. Without that, having money is no guarantee of financial security.

The history books of famous people are absolutely littered with the millions squandered. Michael Jackson was some USD 400 million in debt when he died. The list of people with money woes despite earning a lot is long.

THIS LEADS US TO THREE KEY IDEAS:

Firstly, just income is not wealth. If you’re making five figures and spending six, you’re not wealthy. You’re in debt.

Second, being wealthy today is not a guarantee of wealth tomorrow. Most people’s wealth depends on their business value, property portfolio, crypto holdings or underlying assets in their portfolio, and these fluctuate. Stocks can go up and down, and business investments can fold. It takes careful long-term planning to make sure investments are sustainable.

Third, you need careful wealth management and a prudent long-term approach to keep your assets growing despite market and economic changes.

So how do you convert earning money into being rich? Every story is different and everybody has their own goals and obligations. That’s why you should always start discussions with the very basics.

There are a few very good habits you can get yourself into, starting today.

Create a budget: Always have a budget for your spending every month.  Often it’s the biggest earners that get this so wrong.  Easy come, easy gone for too many!

Track your spending: You can’t budget if you’re not tracking your expenditure. Write down everything you spend – even if it’s something, then produce a simple profit on loss on You LTD.  Be a Finance Director on You LTD.

Save first: Most people spend when the money comes in, and hope to put aside something at the end of the month. Reverse that so that you pay into your savings accounts first, and then spend from what is left.

Be careful of debt: There’s good debt and bad debt. Good debt is usually when you borrow for a meaningful asset – like a property or leveraged portfolio. Bad debt is used to fuel your lifestyle. Be careful of both sorts of debt, but avoid the latter like the plague.

Hire an adviser: People – even those who are good with numbers – are often bad at managing, building and creating their own wealth. It comes from a lack of objectivity, of being too close to see the big picture. That’s where a trusted adviser comes in – with unbiased advice and goals for you to hit. Don’t hesitate – because this is one area of life where a fresh pair of eyes is incredibly useful.

So there you have it. Making it is easier than keeping it, but we hope we’ve given you a framework to think about!

If you are ready to take control of your financial circumstances, build a plan and start ticking off your “to-do’s” prior to returning home then book your meeting with Mike today.

Blog published by Mike Coady.