Creating a plan for building personal wealth is going to help you see the “big picture”; it will allow you to see where you are at, where you want to be and most importantly what you need to do to get there. It goes beyond personal financial planning. I found this a crucial tool to keep me focused and to periodically analyze if I am doing the right things when building wealth instead of trying to do more things.

Because what you are trying to accomplish when building wealth is an on-going long term process it is very important that you break it down into smaller and sequential actionable steps. Saying, for example, “I want to have a million dollars” sounds like a goal, but where do you start?

By creating a plan you can better see if a million dollars is realistic or too low of an expectation given your current situation, abilities, time lines and desires. Second, you now have a better platform to make decisions and see the actions you need to take and habits you need to create to reach your goals for building wealth.

Components of a Plan for Building Wealth

There is no such thing as the right way to create such a plan. Your plan for building wealth will vary based on your desires, knowledge, willingness to do the work and many more things. So don’t get hung up on format. Think and come up with one that works for you. It will be trial and error. My wealth plan is something I have put together from many different sources and I have found works well for me.

1. Assessment of where you are now – This step is not about kicking yourself in the behind for only having $200 in your savings account or wishing you hadn’t bought that expensive car that you can barely make the payments on. What you want to do here is take a comprehensive, overall look of what your personal wealth looks like now. To do this you need to consider the following factors:
• Net worth – How to determine this and its importance is a whole other article but what you are basically trying to do is figure out everything you own that has the potential to increase in value. This is a key point in building wealth, some sources will recommend that you consider your cars and other personal property as part of your net worth - but all that stuff is going to be worth less tomorrow than it is today, so why would you want to consider that?

  Remember, what you are trying to do is establish a baseline to which you can come back and compare so you can measure your progress. Once you identify your assets and deduct your liabilities you’ll be left with your net worth.

• Budget – Here you assess what you have to work with on a present basis so you can identify opportunities for building wealth. Basically, what money you have coming in and going out on a monthly basis. Again, establishing a budget can be more intricate and at the same time less difficult than many people think. Read more about personal budgeting habits.

  I want to leave you with two things, first, a budget is critical for personal financial planning, you absolutely need to know where your money is going; second, you need to know what you got so you can manage it, being a good money manager is imperative for building wealth.

• Things you are doing right and wrong – Hopefully the step above will begin to shine some light on this. Some things might be obvious some might not. For example, the $8,500 you owe on the credit card that keeps on growing every month instead of decreasing, will be obvious sign you are doing something wrong.

  On the other hand you might not be aware that because while you were growing up you always saw that your mother had no money and she would always tell you to go ask your father for money, that it is acceptable for you, as a woman, to not have money and therefore always spend whatever you might have instead of saving or investing some of it.

  You will develop a better feel for what you are doing right/wrong as you learn what is proven to work. For now take an honest look at your current actions and habits and identify the ones that are helping you and the ones that are not.

2. Desired Outcome – Ok get ready to board your personal time machine - here we go. This step can take you anywhere you want to go. Do you see yourself strolling down Rodeo Drive in Beverly Hills, shopping to your hearts content? Or, would you like to make sure that money is not an obstacle when it comes time for your children to choose a source of higher education?

   For me, it isn’t about being able to buy or have more but it is about being able to live better - to live the life I choose. So I defined my desired outcomes in terms of the activities and experiences that I want to see in my future. Then I define what I need to do to finance that lifestyle.

   Just like you should do this step for what you want to see in your life more than just financially here you want to describe what you see as personal wealth for yourself. Don’t be afraid to get carried away, look deep inside and figure out what you want. What do you see yourself doing and having and what kinds of financial wealth will that require? Pay for college education, financial independence, play golf every day, lay on the beach in Barbados, climb Everest, help your parents, etc. Write it down.

3. What you need to do to get there – Now you are going to be translating dreams and desires into actionable items and goals for building wealth. This is important because if you don’t do it then all you got is dreams. From your list of desired outcomes break it down into specific and measurable results that will lead to your desired outcome. Let me illustrate how I did this to see if it helps you out.

   My wife and I know we want to be able to travel extensively and I want to do things like climb mountains, bike across Europe and dive with sharks off the coast of South Africa. Other than the obvious financial assets I will need to do this, more importantly I will need time.

   Although those things are in my to do list what I really need to achieve is financial independence which to me means not depending in any one source for income and certainly not needing a J-O-B. That then becomes my goal - to be financially independent by my 45th birthday - this will enable me to do the other things I have on my list.

   I also have a dollar figure attached to my financial independence goal based on my lifestyle choice, where I am now and research I have done of how much I will need. Be aware though, this is not the same as retirement!! I don’t believe there will be such a thing in my life. This is a goal to not have my life limited by my source of income.

   Now, I don’t want to go into too much detail on my wealth plan, desires and goals since you need to come up with your own. This is about you, not me…

   Look at your desired outcome, make a list (it can be as long as you want) of the things you would need to accomplish to achieve your desired outcome. Now look at this list and then see if you can condense or identify similar actions. Try to cut it down. Look for stuff that is related to each other and try to condense. What you want is to look for a pattern or for several items that can be combined into one. Once you have shortened your list and identified those higher level patterns you are going to shape these into goals.

At this point you have looked at where you are at and where you want to be, now comes the good stuff. “How do I get there?”…you ask. Good, I am glad you did because that is what I talk about in the follow up article for building wealth through dynamic planning…>>>

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