Are you working hard on your business but wondering whether you will ever get ahead?
Over the years we have spoken to many enterprising business owners who have built very successful and lucrative businesses. What is interesting is that while many of these businesses have been generating great returns, the owners often end up in vastly different financial positions.
A common theme in this difference in financial outcome lies in what each individual’s view of what wealth ‘really’ is. Simply put, our experience is that people typically fall into one of two camps when it comes to defining what they mean by wealth. One camp leads to financial insecurity. The other leads to financial security.
The Financially Insecure
Some see wealth in terms of increased consumption, or potential for consumption. They are unable to put off consuming something now for the promise of something better later on. They live for the moment and have no understanding of the financial pitfalls that may await them and their families, and the need to do something now to protect themselves against these pitfalls. They live on a consumption treadmill and never find sustainable happiness.
A great read on this very topic is Alain De Botton’s book ‘Status Anxiety’ which explores the philosophy, psychology, and sociology of post-war Western Culture and why we consume so much and place such importance on possessing material wealth. De Botton sees the western world as believing wealth reflects and measures merit. We all want to be loved. We want the respect and admiration and respect of our fellow man. And, rightly or wrongly, badging ourselves as successful through overt consumerism is one way of getting it.
Or at least that’s what many people think.
The problem, of course, is that there is always something extra to buy. Because of this, people who define ‘wealth’ by the amount they can consume stay stuck like a hamster on the wheel. They are constantly running just to maintain income to feed the almost infinite capacity for consumption.
The Financially Secure
Financially secure people do not act like this. A common trait amongst the successful business owners who have transferred that success into genuine wealth is that they do not equate enjoying themselves with spending money, at least on consumables. That is not to say that they never spend anything. It is more that they never spend everything.
Satisfaction for these people stems from confidence that they are in control and doing what they want to do when they want to do it. They set their own pace. They make their own rules. No one tells them what to do.
That is the great benefit of wealth. Money can create happiness. It just depends on what you do with it and what your attitude is.
These successful investors understand wealth means security, freedom, and control over how they spend their time. It does not mean excessive consumption. To pursue this freedom, these clients work hard to make their businesses successful and then invest most of the proceeds.
They only spend what they have not saved, rather than trying to save whatever remains when they have finished spending.
7 Traits of Wealthy (and Happy!) Business owners
- Their investments tend to be direct investments into property and shares.
- They invest in a range of assets for the long term, at least ten years and probably longer.
- They avoid private debt but take on investment debt where circumstances warrant.
- They employ sensible asset protection strategies.
- They employ sensible estate planning such that the next generation is taken care of.
- They take steps to transmit wealth and the attached security, freedom and control to their children at an appropriate stage in life.
- They seek quality advice. One of the keys to success is to know what you do not know and – even more importantly – to know what to do about that fact.
It seems so simple yet so many successful business owners fail to make the leap to being really wealthy.
Romulae R Gadaoni is an Authorised Representative (1242065) of Dover Financial Advisers Pty Ltd (AFSL 307248). He is the Owner/CEO of Care Financial Services and Accounting.
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General advice warning
The above suggestions may not be suitable for you. They contain general advice which does not take into consideration any of your personal circumstances. All strategies and information provided on this website are general advice only. Please arrange an appointment to seek personal financial and/or taxation advice prior to acting on anything you see on this website.