By definition, wealth is a relative term. The secret to accumulating and sustaining wealth is not easy, but it’s simple. You become and stay wealthy by adhering to a financial discipline, and curbing your expenses, whether for your company or your personal life. The concept of abundance is relative to need, so who’s to say what an abundance is?
The first step in creating wealth is managing your needs. The amount of money you earn does not determine your wealth or financial success. The amount of money you keep after expenses, does. Every day efforts are being made to separate you from your money. A typical adult has potential daily exposure to about 600-625 advertisements in a single day. With print, television, billboards, the web and mobile devices you are constantly bombarded with ads. There is a powerful force trying to brainwash you into feeling a sense of need. As long as you let society define your needs, wealth will elude you.
At IDEX Financial, we believe there are seven key expense ratios that must be measured and controlled in order for you to maximize your potential to become and stay wealthy. Each of these ratios are compared against your net income to give you the best chance of achieving success. Net worth is simply your assets minus your liabilities. Like a business, you should have a balance sheet. By creating and monitoring your personal balance sheet you can determine and track your net worth. There are five key personal balance sheet ratios that need to be measured and tracked in order for you to determine your financial health.