21 ULTIMATE RULES OF WEALTH CREATION

  • Post category:Personal Finance
  • Reading time:14 mins read

Everybody desires to create wealth. This is why wealth creation is highly searched on search engines like Google. It is everybody’s dream to get financial freedom and abundance.

Becoming wealthy or even just rich comes with numerous options and prestige that everyone would like to have. Think of billionaires like Bill Gates and Jack Ma, they have more than they will ever need. This is what financial abundance can do.

Even though many want financial success, very few get it. We only have a handful of millionaires around the world. The billionaires are even fewer. Many just survive and struggle through life endlessly.

Lack and poverty should be avoided at all costs. It is never supposed to be your portion. Never make peace with lack or settle for being poor. Use all your energy and wits to fight for financial freedom.

Everyone has the potential to create wealth. However, many do not play the game of wealth creation by the rules. This is why they work hard and still struggle financially.

21 rules of wealth creation

Here is the ultimate guide to creating wealth. These 21 rules of wealth creation will prepare you for the long journey ahead.

1. Never spend more than you earn

This is the worst financial mistake anyone can make. Many people spend everything they earn and a bit more. This way, they do not invest in a better life. It is critical to always live below your means.

When it comes to spending:

  • Never spend more than 50% of what you earn.
  • Always delay spending for around a week.
  • Have an automatic saving plan. This can be a savings bank account that deducts money from your monthly income even before you get it.
  • Always pay yourself first. Invest before you spend.
  • Avoid the rat race- Increasing your expenses as your income increases.

2. Never borrow to consume

Many people who have spending problems end up borrowing to finance this bad habit. They borrow to consume. This is one of the worst mistakes you should avoid if you want to create wealth.

To create wealth, borrowing to invest is important. This is called using other people’s money.

However, without a proper plan and knowledge, borrowing can end up in wastage or poor allocation. This can lead to financial pressure and even bankruptcy.

When borrowing from a bank:

  • Have a prior solid investment plan.
  • Never borrow more than you need.
  • Negotiate for better terms I.e. interest rates, repayment period, etc.
  • Invest immediately after receiving the cash.
  • Do not take a cent away for consumption purposes.

If you can properly handle debt, you can easily create wealth.

3. Never buy liabilities before assets

An asset is something that increases your economic value. In short, it puts money in your pocket.

A liability decreases your financial value. This means that it takes money from your pocket.

Never buy liabilities before you have a strong asset position. Only buy liabilities after you have enough assets. Make sure that the liability does not consume all the income you get from your assets.

Common liabilities people buy too soon:

  • A personal car.
  • A personal house.
  • Taking kids to very expensive schools without being financially free.
  • Going for expensive holidays just because your workmates are also doing it.
  • Wearing expensive clothes and shoes.

Assets everybody should have:

  • A business
  • Real estate
  • Promising stocks
  • Precious metals like gold, diamond, silver, etc.

Always make sure that you have more assets than liabilities. Let your assets bring you more money than your liabilities take away.

4. Avoid get-rich-quick schemes

These schemes are responsible for the financial losses of many. This is how many go bankrupt.

The rule is that if an investment plan looks too good to be true, it probably is. All these investment vehicles that promise very high returns are most probably a fraud. Never invest in such investment schemes.

If your conscious is not feeling good about the plan, leave it. Good schemes promise between 5-25% return on investment. Anything above that is something worth being cautious about.

5. Never pay for more than a commodity is worth

In wealth creation, negotiation is not a weakness but wisdom. Never pay than a commodity is worth. When you do, you lose economic value.

Always negotiate when doing purchases. This will ensure that you pay what a commodity is worth or even less.

Negotiation is something you practice. Start negotiating even in small deals. Never lose a cent. When you start creating wealth, you will start making big deals like buying a company. Here, poor negotiating can cost you millions.

When making purchases:

  • Do due-diligence. There will always be a cheaper supplier.
  • Start with an extremely low price and then keep adjusting upwards.
  • Never show the other party that you are desperate.
  • Show them that you are informed. Let them know about the competitor’s prices.
  • Never hesitate to walk away if the deal does not favor you.

If you keep paying less than commodities are worth, you will keep gaining economic value. This is critical to wealth creation.

6. Never get content with having just enough

When it comes to wealth creation, never get content with having just enough. Be happy but do not get contented. Successful people always desire to have more. This is what motivates them to keep getting more.

Poor people, on the other hand, just want to have enough to live by. After they have gotten comfortable, they stop pushing for more. This is why the poor remain poor as the rich get richer.

7. Never invest without due diligence

The world of investment is complex and risky at the same time. If you invest without doing your due diligence, the chances of losing everything are very high.

After hearing of an investment idea, give yourself time to do your research. Do not believe it even if it is coming from your friend. They might as well be misled.

8. Avoid getting advice from poor people.

If you want to create wealth, seek counsel from successful people. These are people who have already gotten what you dream of. Poor people will only teach you what has not worked in their lives.

This is why any ambitious person needs a mentor. This is a person you look up to. They should be way ahead of you in all aspects of life.

As the saying goes, if a blind man leads another blind man, they will both fall into a ditch. Avoid this at all costs. Only a successful person can coach a person to success.

Read books written by successful people, read their blogs, listen to their videos and audios, ask them questions, read their biographies, and so on. In all these ways, you are getting the secrets of their success. These wealth-creating secrets are invaluable.

9. Never lend what you are not ready to lose.

This is critical if you want to avoid financial losses; only lend what you can lose. Many debtors rarely repay what they owe their creditors unless they are forced to do so.

As an individual, you might not be able to force your family member or friend to pay what they owe you. In this case, lend what you can afford to lose. Chances are that they might never pay you back.

Keep in mind that the first rule of wealth creation is that you should never lose money. To create wealth, you have to keep gaining and avoiding losses as much as possible.

10. Avoid being impatient with your money

Wealth creation takes time. You will never be a millionaire in a day unless you win a lottery.

After you invest, give it time to bring returns. Do not quit and divest just because you are impatient. Making sound investments and giving them time to create wealth for you is critical.

It has been proven that long-term investments are more rewarding than short-term investments. In this case, just think long term and allow your money to bring you more money.

11. Never fail to start a business

All billionaires are business people. All wealthy professionals are also business people. As I always say, you cannot afford not to start a business.

This is why you need to start a business to create wealth:

  • Profits grow exponentially.
  • You can use other people’s expertise and time to create your wealth.
  • For a limited liability business, your liability is limited to the level of your holding.
  • It is the only way of taking advantage of the many opportunities created around the world.
  • You can easily use other people’s money to create wealth.
  • You determine how much you make at the end of the month. Your effort is directly reflected in the financial results.

Starting a business is easy in most countries. Governments have realized that improving the business environment in their countries is the greatest strategy they can use to grow their economies.

Businesses are hard to scale. It takes dedication and knowledge to beat your competition. Keep an open mind and guild your mind with shock absorbers because the ride will be extremely bumpy.

12. Never invest in what you do not understand

This is a common mistake people make when it comes to wealth creation. Many people just invest in what comes their way. They end up losing money and giving up on their financial goals. If you do not understand an idea, give yourself time to learn.

Most investments require active management. Without understanding, you will not be able to grow your investment portfolio and create wealth for yourself.

13. Never buy wants if you are not financially free

There is a big difference between needs and wants. A need is something you cannot do without. A want, on the other hand, is something you can do without.

Having a house may be a need but having a 7 bedroom house is just a want. Getting a car may be a need but getting a V8 is just a want.

The rule is that you should never buy wants before you are financially free. After you get financial freedom and abundance, you can get everything you ever wanted.

14. Avoid moving with the masses

Avoid making moves just because people are making them. As Warren Buffet says, be paranoid when others are greedy and greedy when others are paranoid. This means that the crowd is always wrong.

When people get to know about a certain investment, the greatest investors have already invested and moved on. This is why you need to seek investment opportunities actively and not just following what people are investing in.

Avoid following the johnnies. Do not follow trends, fashion, or any other type of fads. The herd mentality only leads to poverty and financial struggle.

If you are serious about wealth creation, do not follow the crowd. Just keep seeking wealth-creating opportunities actively.

15. Never make emotional money decisions

Becoming rich is a logical process, not an emotional one. It has been proven that emotional decisions lack rationale and logic. This means that emotional decisions may probably not be in your best interest.

When it comes to wealth creation, you need to be emotionally sober and logical at all times.

Ways to avoid emotional decisions:

  • Logic should be applied when it comes to giving and supporting different causes in the community.
  • Avoid doing something just to please someone.
  • Avoid doing something to feel good.
  • Do not make a decision to settle scores with your enemy.
  • Use reason when making religious donations.
  • Never make purchases to show off.

If you can avoid making emotional financial decisions, you are well on your way to wealth creation.

16. Never get lazy

Laziness is one of the greatest enemies of wealth creation.

Wealth creation requires the generation of valuable ideas as well as implementing them. These two steps give us the two types of laziness you should avoid.

  • Mental laziness- This kind of laziness is very dangerous. It is what many people suffer from. When you are mentally lazy, you fear thinking hard. You are never creative or innovative.

Wealth creation starts with a noble idea. An idea that is scalable and market-oriented. It should provide solutions to the world’s major problems.

Generating these ideas is not a walk in the park. It calls for mental hard work, dedication, focus, and will. This is not for the mentally lazy.

  • Physical laziness- After generating ideas, you need to implement them. Ideas that are never implemented can never create wealth for you.

If a person is physically lazy, they will generate great ideas but they will never give the necessary effort to implement them. Success calls for early mornings, late nights, 14-18 hours of working on your craft every day, 7 days a week, and 52 weeks a year.

If you desire success, make sure that you are neither mentally nor physically lazy. Both faculties have to put their best foot forward. This is how wealth is created.

17. Always pay yourself first

This is a concept that we have discussed earlier in-depth (How to pay yourself first).

Paying yourself first means investing before consuming. It means putting away money every month for investment even before you start consuming. This means that investment is a priority to you.

This way:

  • You will avoid consuming everything or spending more than you earn.
  • It will help you invest consistently without fail.
  • You develop a mindset of not valuing consumption over investment.

This is a concept that you must follow strictly if you are serious about wealth creation.

18. Avoid divorce

Divorce is very expensive. If you do not think so, ask Jeff Bezos. He parted with 34 billion dollars in divorce settlements.

I know many other people who pay almost everything they earn every month due to broken relationships or marriages. Child upkeep after divorce or separation can also be very expensive.

Keep this in mind:

  • Avoid getting children out of wedlock.
  • Solve family disputes amicably as soon as they happen.
  • Marry the right person from the word go.
  • Water your relationship with love every day.

Since divorce can rob you half of your wealth, it is important to avoid it at all costs.

19. Avoid expensive ceremonies

There are many ceremonies people deem as necessary but they are not. I am talking about weddings, birthday ceremonies, anniversaries, etc.

Even if you have to do them, keep the budget as low as possible. Private ceremonies are the way to go. They ensure that only quality friends attend. Such friends will always pay the cost back in one way or the other.

Many people drain their bank account just to finance a one-day wedding ceremony. Many even borrow money to make their wedding ceremony colorful. This is not financial intelligence.

Avoid ceremonies at all costs unless you are making money from them. They do not serve any economic good.

20. Never stop learning

The secret to wealth creation is to always keep learning. Numerous wealth-creating opportunities are hidden in books, blogs, videos, and audios.

Similarly, keep learning from your experiences. After all, experience is the best teacher. In all you do, just keep learning.

All successful people are learners for life. Warren Buffet can read up to 8 hours every day. Bill Gates reads a book every week. Mark Cuban reads 3 hours every day. Elon Musk taught himself everything he knows about space technology.

If you want financial success, just keep learning.

21. Never give up

Never give up. On the way to wealth creation, many challenges will make you feel like giving up. You must resist this feeling at all costs.

Winners are failures that never quit. This is the only difference between successful people and everybody else.

Even if you tried something and it never worked, do not give up, try something else, or the same thing differently. This is the only way you will create wealth.

Final thoughts on wealth creation

Wealth creation is never easy but it is also never hard. It all depends on how well you follow the rules. If you follow these 21 rules of wealth creation, you cannot fail to get what successful people got.

As we pointed out, wealth gives people options. Poverty only limits the life we can have. Get wealth and you will be much happier and fulfilled. This is how life is supposed to be.

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