‘I want to be a millionaire’

Taking responsibility of their financial lives
Taking the decision that something needs to be done about changing the way money is managed. Says Devang Shah, CEO of the Mumbai- based financial planning firm Right Returns, “The person needs to be willing to take total responsibility of becoming wealthy. It may mean doing everything oneself or getting a trusted advisor to work with him. The doing is not important. The attitude of being willing to do is important.” Not doing anything is also a decision. It is a decision to stay where you are. Those who grow their wealth, decide to the change status quo.

Making financial goals
Having a goal is the best motivator for those on their way to wealth. For most people savings is usually a residual and not a target. Having a savings target each month is one of the best ways to begin the journey to wealth. Says Surya Bhatia, CEO of the Delhi- based financial planning firm, Asset Managers, “99 per cent of my clients find that they are not saving to their full potential. The gap between what they spend and what they think they spend is 20 per cent.” Agrees Shah, “Those who work with the intention on funding their goals find it far easier to stay on track. Money is only one of the things they need to achieve their goals”. Look at yourself, the two goals of meeting the tax-saving investment corpus at the end of the year and making that insurance premium are the ones that are fulfilled. The rest of the money leaks away.

Taking controlled risk
Keeping the money in zero risk, low return instruments like bank deposits will not get you far on the road to wealth. The rich take controlled risks with their money. The richer you are the more risk you can take, but even for a person who is starting out, moving from the zero risk spot on the risk-return equation to a medium risk or even a low risk asset allocation is better than letting inflation eat out purchasing power from a fixed interest portfolio. Some form of equity allocation in the portfolio is essential to lift the portfolio off the ground.

Keeping a long term view in mind
In 1970 the Harvard sociologist Dr Edward Banfield wrote in a book called The Unheavenly City that men and women who were most successful in life and were most likely to move up economically were those who took the future into consideration with each decision they took today. Wealth was not about family background, education, intelligence, influential contacts but in a particular attitude of mind that allowed the person to take the long term into consideration and act accordingly.

Being steady in savings and investments
The rich are regular in saving, investing and monitoring their investments. Regular and steady investing is probably the one thing that makes a real difference to the final corpus that a person accumulates. Small sums add up to big amounts over time and compound interest allows the interest part to becomes bigger than the principal. It is not enough to make the investment, it is equally important to review the decisions and sell when the time is right. The sell decision is probably more important than a buy decision.

Recognising the difference between wealth and money
The people who understand the difference between being wealthy and having more money are the ones who are rich. Says Shah, “The first has got to do with one’s goals and values. The latter has no end.” Having a higher income does not ensure wealth, if the income is all spent. Some of the highest earning people are the most indebted and an average middle class person, through regular and scrupulous saving, may end up richer. Deciding to earn a higher income by working harder does not ensure wealth, deciding to convert that income into investments does.