Nelson Letshwene

Author and Speaker



Stabilising Your Personal Economy

"There is no such thing as a "Self-Made Millionaire." There are only team-made millionaires.”

Loral Langemeier

All of life is a process not an event. Those who live from event to event must live with a lot of disappointments because you can’t control these events. If however you set up a system, which gives you processes to follow, you can safely predict the outcomes of your processes.

Minister Gaolathe’s budget speech has been said to be “business as usual” with no dramatic announcements. Business as usual is only possible if you follow a system. While events may come and go around you, you remain “constant as the northern star”.

It has been the government’s system to save money during good years, and to use savings during lean times. The whole idea is to maintain stability.

Those of us who live from event to event, we expect dramas in different areas of our lives at different times. The global economic crunch for example, has brought a lot of drama in many lives around the world.

Fiscal discipline and wealth building is a process. As Loral Langemeier, author of The Millionaire Maker says, Wealth Cycle investing isn't a scheme, a plan, or even a strategy. It is a system that produces results when followed. Because it is a system and not a strategy, it encompasses and allows for a wide range of investment ideas and strategies.

The key is to follow a system of building blocks and stick with the system.  As they say, when all else fail, stick to the basics. Here is a brief summary of some of those basic building blocks:

Establish a Financial Baseline. This identifies where you are today: your income, expenditures (and net income), and your net worth (i.e. your assets minus your liabilities). It's surprising how many people can't tell you their net worth (or don't want to).

Conduct a Gap Analysis. What's the gap between your destination and your starting point? Can you live in this gap?

Create a cash machine. Your cash machine is not necessarily your job. Ideally, this is a business you create (possibly in addition to your job) that will produce additional cash flow for your investments.

Build a Wealth Account. You purchase new assets from the money you have in your wealth account. You can manage your debt with other funds, but your wealth account money is strictly used to buy assets (which increase your monthly cash flow and your net worth).

Manage your debt. Reduce your debt - not first, but along with building your wealth account and buying assets. Often, your debt payments can be made from the money you earn on your assets, instead of from your paycheque.

Buy assets. Become an asset junkie. Lead your wealth team. Work on your leadership skills so that you are leading your accountant, real estate agent, attorney, assistants, and others. Your wealth is up to you, so don't leave it in the hands of others.

Work on your mental and emotional conditioning. What keeps most people from becoming wealthy isn't a lack of opportunity - it's how they think.

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