The Wealth Formula succinctly depicts the components that are necessary for you to create real wealth. The Wealth Formula is shown below:

M+K+P+A=W

It identifies four essential wealth creation stages and the relationship between them. These are:

Wealth Mindset

Wealth Knowledge

Wealth Planning

Wealth Action

It links each of these four component through the plus sign, +, which signifies that each of the four components are necessary for you to create wealth. In other words, missing one or more of the four wealth components will dramatically impact your ability to generate wealth.

For example, you could mentally prepare yourself, learn everything you need to make enormous wealth and create the most detailed plan to achieve your desired level of wealth, but if you don’t action it then all that preparation is worthless.

Similarly, if you mentally prepare yourself, learn everything you need to make enormous wealth and run off actioning your newfound mindset and knowledge but fail to make a plan it is like setting off in your car to go somewhere you’ve never been without taking a map. What’s your wealth destination? How will you know if you’ve achieved what you wanted to achieve? How do you know your using the right investment vehicle? How do you know if you’re on track or not to reach your target? Are you surpassing or underachieving against realistic milestones? All of these questions would be easily answered with proper planning.

So let’s look at each of the four wealth creation categories in turn.

Wealth mindset:

Wealth Mindset is the first of the four wealth creation categories and examines the importance of the correct mindset to creating wealth and financial freedom. Wealth mindset covers the interaction between you and your environment and the process of adjusting your thought process to think like the wealthy.

For example, the poor and middle class generally think that money is scarce and hard to come by. Saying such as “Money doesn’t grow on trees” and “I can’t afford that” spring to mind. The wealthy see a world of opportunity and abundance. They see money as little more than a concept and simply the by-product of providing value to others. They also know that offering value to others is only limited by their imagination and thus money must too only be limited by their imagination. The wealthiest people of the planet simply understand this and have incredible imaginations that create amazing value to others.

For example, Jeff Bezos realised that bookstores were severely limited in the amount of books they could offer their customers due to geographic and physical constraints. In other words bookstores could only service customers that lived near them and could only offer a limited amount of books, which fit in their store. He saw an amazing opportunity to solve these two problems by giving access to anyone anywhere via the Internet and offering a catalogue that is 40 times the size of a large bookstore. Jeff founded the multi-billion dollar company Amazon!

Wealth Knowledge:

Wealth knowledge is the second of the four wealth creation categories and examines the financial knowledge that is essential to create wealth and financial freedom. It is essential for wealth creation that you are knowledgeable about your own personal finances, the economy, the psychology of markets, compound interest and the asset classes and investment products available to you. Further, you need to understand how to interpret financial statements, investment strategies and risk management all from the wealth creation perspective.

Wealth Planning:

Wealth planning is the third of the four wealth creation categories and examines the essential component of planning to create wealth and financial freedom. Wealth planning is absolutely essential, yet on 3% of the population has clearly written goals and plans. A Harvard Business School study found that this 3% earned 10 times the average of the other 97% and they accumulated 98% of the wealth.

Wealth Action:

Wealth Action is the forth and final wealth creation category and examines the element of action in your wealth journey to create wealth and financial freedom. The importance of action to achieving wealth is obvious. Nothing can be achieved without action.

By using the wealth formula you can easily learn where your wealth creation strengths and weaknesses are and where you need to concentrate your efforts at improving.



By: Emlyn Scott

About the Author:

Lee

Mr Rothwyn asked:


All socialists share the belief that capitalism unfairly concentrates power and wealth into a small section of society who control capital, and creates an unequal society. This means that what is happening is the opposite of Socialism. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved.

Basil

RUBoi asked:


how can wealth creation reduce poverty, and how can it create poverty.

Bradley

Successful wealth creating depends on a balance between mindset and financial strategy. Understanding and accepting this determines the success of an individual’s efforts at wealth creation; to determine whether you have the right mindset to succeed and create wealth, take this simple test, devised by Jamie McIntyre of the 21st Century Academy:

- Suppose you were given a choice between being given $1 million dollars, and being given a wealth creation education. Which would you choose?

It seems fairly obvious that the majority of people would instantly choose the $1 million in cold, hard cash. And that majority would also think that all their financial problems were solved. Really, you could do a lot with a cool, easy million.

Would A Million Dollars Really Solve Your Financial Problems?

Honestly, you could do a lot with a million dollars. If you knew what to do with it to make that million last a lifetime. But really, how long does a million dollars last these days? How many years would it take you to spend a million dollars, assuming no investments and no change to your current lifestyle, if you were given a million dollars cash free and clear? How much of that million would go right to paying off your debt? How much would you be left with?

Even if you took that million dollars and did nothing but pay the bills you have, you’d be out of money in a matter of years; long before the end of your life. Chances are you’d even find yourself worse off in the end than you are today.

Sound unrealistic? Consider this

- A study of Australian lottery winners showed that of those who win a million dollars, most are worse off in a period of three to seven years.

Why? Because they have nothing but a lifetime of financial reaction to guide them. They have no money skills, and no mindset to guide their efforts at spending and investing, no commitment to financial success!

Now, given a wealth creation education, people are far more likely to succeed. Had that million dollars been paired with the knowledge and mindset to succeed financially, that money could have been invested and turned into more money, money virtually out of thin air!

The point of this exercise is to show that the solution to financial struggle is not money in and of itself. The solution to financial struggle is an effective financial education, a wealth creation education.

What Is A Wealth Creation Education

A wealth creation education consists of two parts.

1. Lessons in developing the mindset for financial success

2. Lessons in financial strategy, how to make money work to make more money

Together, these two parts make up 100% of the whole necessary to achieve financial freedom for life.

To go back to the original exercise, let’s suppose that this education were chosen over the million dollars. What then?

In that instance (assuming a true commitment to wealth creation), the outcome is far different. Even starting with seemingly nothing, the individual learns to create wealth by utilizing the various money systems and financial strategies of the world. In three to seven years, the wealth creation student is retired (or working only because he or she wants to). In three to seven years, when the lottery winner is struggling more than ever financially, the wealth creation student is letting his/her money work for him, rather than the forcing himself to work for more and more money.

The Wealth Creation Prize

Faced with these realities, it becomes obvious that the real wealth creation prize is the wealth creation education. With a wealth creation education, the possibilities are limitless, and wealth continues to build.

Money comes and goes, as the wealth creation student understands; where one income stream ends, another can surely begin; and while a million dollars can only get you so far, a million and a wealth creation education can take you on for life.



By: Sean Rasmussen

About the Author:

Murray

larry asked:


Okay, she couldn’t resist rubbing things in the administration’s face, but she was so venomous that it cost enough GOP votes that the bailout measure failed by 12 votes! Everybody says that the offer to increase the FICA from $100K to $250K will get enough votes to pass on Thursday or so, perhaps as the most shameless bandaid tactic ever used in politics of all time, but be that as it may. I have been warning people that the same allowing of slim margin financing seen everywhere you look, from the stock market to cavalier home finance, for the last few years, resembled the same REGULATORY situation which led to the crash of ‘29, when worldwide drought caused the stocks to not go up enough for the profits to make the payments on their slim-levered purchase. Now that all the means of WEALTH CREATION we have shipped to China mostly, have removed much of the excuse for our currency to exist, we now watch it become hollow before our eyes. As I predicted many times, this would soon catch up with us. However, we can make NEW means of wealth creation, to replace what we have lost. One item for export and wealth creation domestically, a new drought tolerant poor soil Maize/corn has been developed and has proven itself in Africa feeding both animals and humans. We can now use currently unused poor soil USA lands and grow enough Maize/corn to make enough Ethanol to both cure our addiction to foreign liquid fuel, and have some for export! This new huge wealth creation on our own shores would by itself largely bail us out. Details at http://www.regardslarry.com/ . However Big Oil is so powerful that they can purchase any law they want, including right now getting subsidies while making the biggest corporate profits any business has made in history. And they don’t want any competition right now.

You see how I feel about this. How do you feel about the following questions?

1) Did Speaker Pelosi simply and Freudianly get carried away, or was it intentional to derail the bailout and make the GOP look especially bad, politicing at the expense of America?

2) What do you think basically underlies our Wall St problems?

3) What other means of local USA wealth creation can replace the businesses we exported? I mean things which will bear fruit soon, not switchgrass 20 years and 3 breakthroughs from now.

Regards, Larry.

Raymond

Sport asked:


One of the most authoritative theories about the constitution of society in the modern world is that economics and economic relationships define the fundamental structure of all social relationships, indeed of society itself. Both Adam Smith and Karl Marx, in their very different ways, either asserted or implied the primacy of economics and economic relationships as fundamental to the existence and evolution of nations and to the creation of wealth. But these views displaced an older conception of society which considered ethics and ethical codes as the fundamental bedrock of societies. In that older view, the success of a society was judged by its adherence to the ‘good’ rather than to its store of accumulated wealth. Ethical codes may have had a religious dimension, but it was the way conduct and behavior were regulated by or referred to ethical judgement that allowed for the stability, maintenance, and success of social relationships and, hence, of society as a whole.
this came from an essay topic for the 2007/2008 national Humanitaries essay competition at UBC…

Alfred

Willis Jeffords asked:


capitalism is not zero-sum. if it were, why do we have cities, roads, technology, and other enduring testaments to wealth creation?

Elliott

Richard K asked:


FDR had a Brains Trust. If Barack Obama had one, it should have a whole division of Young People [e.g. 16-35], an equal number of men and women. Such a group of young thinkers and imagineers could change the face of America by focussing on the national genius of freedom….in thought and healing and wealth creation and peacemaking and love.

Vance

Zane M asked:


I’m just wondering does anyone have some lame mans terms for trading Emini’s. I found one particular website http://www.free-dvd.com.au/index.php/share-market/what-are-eminis/

But it seems a little complicated. So if anyone can explin how they work simply and if you’re having success that would be great.

Griswold

Dorky asked:


On capitalism, people will talk about individual producing goods with $0.5 and selling it for $1, for example, thus earning a profit of $0.5 (some sort of wealth creation, or is it really?) and we all start assuming everyone is a winner.

If that’s the general understanding, then let me give an example. Suppose India suddenly becomes so effective and efficient that it becomes a net producer, that 1 billion of the population each spend $0.5 and produce $1 worth of goods. Suppose the Indians spent $0.5 billion ($0.5 x 1 billion Indians) on Country A’s human labor to produce the goods. Suppose the people of Country A, feeling grateful for the employment, spend all of their $0.5 billion worth of salary/wages on the Indians’ finished goods of $1 billion. Now that the people of Country A only has $0.5 billion, so where should the other $0.5 billion comes from to buy the other half of the Indians’ finished goods? Assume there’s no other buyer from other countries other than the people of Country A, then the Indian economy will have 0% (zero) growth. Now we all know that the more money is introduce into the market, the higher will be the inflation rate. Since the global economy recorded net growth every year, where in the world does the extra surplus of $0.5 billion, in this case, comes from?

Note:
1. Assuming this extra $0.5 billion is net wealth after taking into consideration the inflation.
2. We all know in reality no country can be as effective and efficient as India in this simplified story-telling example, so the equation will be far more complex.
3. This country of India and Country A can be substituted with individuals, small companies, big corporates, government, etc.
The actual equation will also involve human labor being substituted with automated machineries (to save costs and increase shareholders’ value) and consumer credit that officially make the credit card holder a debtor.

Michael