So you want to know how to generate wealth? Well I have good news and bad news. The bad news is, it’s not going to be easy. The good news is, it’s not impossible at all: tons and tons of people have done it before. In reality, it’s very simple. What confuses most people is when they’re told that it’s a simple process. They hear “simple”, and they think it means “easy”. But “easy” and “simple” are really two very different concepts.

No matter how much material is written about how to generate wealth, there’s only one way to successfully do so: make more money than you spend. As long as you manage to have more money coming in than is going out, you have what I like to call the basic setup of wealth generation. If you want to become wealthy, you need to create a surplus that you can then use for savings and investment purposes. There are two ways to create that surplus. You either reduce your spending (given the same income level) or increase your income (given the same expense level).

Admittedly, or at least in the short term, it’s easier to reduce your spending so you can generate more wealth. But the flaw with reducing your spending is that there is only so much you can do about it. Some stuff, like food, shelter, and clothing for example are necessities. What this means is that there will come a point where you can no longer reduce your spending. Now don’t get me wrong. If you want to be wealthy you will have to control how you spend your money, because the natural tendency is to spend what we earn (and then some, in some cases). Instead, the point was that while you can (and should) reduce your expenses, you won’t get that much farther ahead unless you generate more income.

There are countless ways to make money. All you need is a couple good money making ideas and the discipline and perseverance to follow through with them until you succeed. You will probably have to get a little creative and understand the mindset of the people that you’re targeting in your next business venture. In case you’re not the entrepreneur type, you can update your skills and your resume and go for a higher-paying job. The beauty of also exploring the “make more money” side of wealth generation is that contrary to the “reduce your spending side”, its upside is theoretically unlimited. No one can tell you how much more money you can make!

Money Making Ideas That People Use To Generate Wealth Even In A Recession

Money Making Idea 1: Online Marketing

The Internet has created a way for lots of people to start making money and create income streams through a number of online marketing techniques. In many cases, although they sound really new, they’re merely variations of proven, centuries-old marketing techniques. The main difference is that the Web has considerably shortened the time frame it used to take to start generating money. In the Internet marketing realm, the most popular ways for people to make money are pay per click advertising, affiliate marketing, and direct product sales. In order to make money, website owners have to develop methods to drive visitors to their websites. Once that’s taken care of, then there’s plenty of ways you can monetize those online properties.

Money Making Idea 2: Passive Income Streams

There are different views about passive vs. residual income. My favorite definition of passive income is this: passive income refers to income that is received without a direct participation in a business concept. So with that in mind, I think of stocks, bonds, and investment vehicles where you receive money even though you’re not actively involved in running the business. Read Stock Market Success For Beginners for more information.

Money Making Idea 3: Residual Income Streams

My idea of residual income is that it’s income that is recurring over time, that you get as compensation for something that you did once. You have nothing to do after that to keep it coming, or you have to do very little. Insurance agents are a good example of people who earn residual income from insurance payments that their clients make over time. Similarly, people like actors and singers earn residual income from their movies/TV shows/album sales, years after having put in the work.

Money Making Idea 4: Leveraged Income Streams

Leveraged income refers to income that you make by working with or through other people. For example, online affiliate marketing is one of the most widely used strategies. In this case, you have companies paying other companies or individuals to post their ads on their website. If the website owner has a visitor that clicks and buys something from the posted ad, the website owner will be compensated by the affiliate company.

Money Making Idea 5: Real Estate

It’s commonly said that wealthy people either make their money in real estate, or keep their money in real estate. If you want to get rich by investing in real estate, there are several methods you can use, including (but not limited to) buying to rent, buying and selling foreclosures, fixing properties up to sell and looking for undervalued properties to take advantage of the appreciation or value opportunity. Although many beginner real estate investors think of the big money they’re going to be making, most real estate investors will get their beginnings with a single property, and then build up their investment portfolio over time. Buying to flip allows to make quick, one-time profits; buying to hold allows to build a stream of passive income, especially in you hire a management company to take care of your properties and collect the rents.

Money Making Idea 6: Network Marketing

This is obviously not for everybody. Yet it’s undeniable that many famous wealthy individuals around the world have gotten their start in network marketing. The concept is still rather new, and the negative publicity from people who have failed at it causes people to still see it in a negative way. But network marketers can earn money in several ways, including directly selling the products and services, a percentage of what their down line sells and through residual income from product or service re-orders. Building a network marketing business requires a substantial amount of time investment in the beginning, before the time demand eventually decreases and the income stream grows and grows and grows.

How To Generate Wealth | Money Making Ideas

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• Buy Stocks For Your Children During This Recession

The word is (finally) out: we’ve been in a recession for a year now. Although this is hardly news for most of us, it’s good that the “professionals” have finally agreed on it. So with the recession “news” and all the financial turmoil that we’ve witnessed all year, we’ve been tightening our belts and this attitude has carried over into the holiday season. Although I personally don’t push the “frugal” agenda, many other personal finance bloggers have been offering tips on how to save money on all kinds of things, including gifts for the holiday season.

I was reading this parenting magazine lately and I came across an article that suggests buying stocks for your children as gifts this holiday season. Of course I picked it up and I have to say that the advice that was offered was of the highest quality. I am a follower of Warren Buffett’s investing principles, and a strong believer in the power of dollar-cost averaging. It so happens that this article touches on both, in a way that’s very refreshing and is a welcome departure from the doom-and-gloom news of late.

I put up a post a while ago on my other personal finance blog, about Warren Buffett and how I think he’s behaving in this recession. It wasn’t even a wild guess, as I took it straight from one Berkshire Hathaway’s annual reports. Referring to bad economic times and the pessimism that they bring along with them, Buffett says:

“We want to do business in such an environment, not because we like pessimism but because we like the prices it produces”

He also has another saying that goes:

“Be fearful when others are greedy and greedy when others are fearful”

As we all know, the stock market has taken quite a beating this year, and this weekend the President-elect has warned us that things will get worse before they get better. But guess what? Now might be the best time to buy stocks for your kids! As a rule, if you’re looking for a short-term return on your money, stocks are not a good investment for you, as stock returns can vary greatly from one year to the next. But if you can afford to wait, they are your best friends. And who can better afford to wait than, say, your 3 year old daughter? Simply put, it’s a really good idea to buy stocks NOW for a child, who by definition has a long investing horizon. In five, ten, or twenty years, when all this is over, those companies that you scooped up for a song might very well be churning out solid profits.

The other added benefit of buying stocks for your children is that it’s a great opportunity to introduce them to the concept of investing, and to teach them about delayed gratification. Explain to them that what matters is what their stocks will be worth when they are 18, not the day-to-day fluctuations and all the noise that they will undoubtedly get from the media over the years. Getting them to understand the concept of compound interest is key, and later on, in their teens, they can fully grasp the related concept of dollar-cost averaging.

How And Where To Buy Stocks For Your Children

Even if you’ve never invested for yourself before (which is something that you should attend to ASAP), buying stocks for your children is not complicated at all. Here are a few available options:

Buying individual stocks. Websites such as Zecco, Sharebuilder, and E-Trade allow you to buy and trade stocks with low commission fees.

Buying shares in a mutual fund. Being that a mutual fund holds a diversified portfolio, it’s a better investing approach than trying to pick individual stocks. Also, a mutual fund allows you to invest smaller amounts of money (as low as $50 per month) as opposed to having to buy a fixed number of individual shares.

Investing into a 529 plan. A 529 Plan is a way to save money for your child’s college education that offers significant tax breaks. The biggest advantage of 529 plans is that once you put money in them, it’s never taxed again. Since it may be 15 or 20 years before that money is withdrawn, it’s that many years during which the money that is in this account is allowed to compound tax-free.

Finally, buying stocks for your kids can be a good time to teach them about socially responsible investing, as the concept is gaining both in exposure and popularity. The benefits are obvious, and if everyone gets their kids to buy into the concept, then they will get that much closer to actually having an enjoyable future.

Summary: Buy stocks for your children during this recession. Firstly, you will get good prices on your stock purchases. Secondly, as your child’s investing horizon is decidedly long-term, he/she will gain as the stock market trends upwards in the long run.

Buy Stocks For Your Children During This Recession

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As I’m writing this post, I’m sort of smiling to myself: in this economy (or even in times of economic expansion), becoming a millionaire is quite an exciting proposition. So why bother listing the best ways to become a millionaire? Well the answer is actually quite simple. Looking back at how many of the world’s wealthy have made their fortunes, you will find out that their success has been built on some traits they’ve had to hone. Developing persistence, following a vision, perfecting a talent, opting for a frugal lifestyle, I could go on and on… The fact of the matter is that if doing what you’ve done so far hasn’t turned you into a millionaire yet, most likely 20 years from now the same causes will be producing the exact same effects. In order for you to reach millionaire status, the very first prerequisite is acquiring the vision and mindset of a millionaire.

The Necessary Mindset To Become A Millionaire

Robert Kiyosaki, the best-selling author of Rich Dad Poor Dad and other personal finance books, says that “if you can grasp the idea that money is not real, you will grow rich faster”. As it turns out, our entire financial system is a complete fabrication. The money we use as the basis for our financial transactions is not real, it’s fiduciary money, from the latin fiducia which means trust. The whole thing works because we all believe it does. But how does that relate to you becoming a millionaire, you ask?

Well the very same principle is at work for you. If you firmly believe you can be a millionaire, you most likely will. The main problem is that most people don’t believe they can be millionaires, they just wish they were. The difference between wishing to be a millionaire and believing you can be one is planning for your success. That means getting a clear picture of what success means to you because, let’s face it, you most likely don’t want to be a millionaire just so you can have a lot of money in the bank. You want to be a millionaire because of the lifestyle it can bring you.

Planning for your success will also help you avoid falling back into poverty after acquiring wealth, which is what happens to most people who literally get wealthy by accident. A millionaire mindset has nothing to do with how much money you have right now, and everything to do with how you manage the money you have right now. If you can learn to create a surplus that you can invest, then you’re halfway there. Creating that surplus is a mix of keeping your spending under control AND increasing your income. Acquiring good money habits is probably one of the most important skills you’ll have to master because whether you believe it or not, if you’re struggling financially, more money might very well increase your problems instead of solving them. Being unable to manage, say, $50,000/year is probably a good indication that you can’t manage $500,000/year.

But how do you actually get to make the extra money that’s going to propel you to millionaire status? I’m glad you asked. I’ve tried to categorize how most of the world’s successful people have made their money, but instead of going by industry, I’ve decided to go by “method”.

Methods to Become A Millionaire

1. Make Money, Save Money, Invest Money. In this category I put those who follow Warren Buffett and Peter Lynch’s philosophies. It’s very simple. You earn an income (either by getting a job or running your own business), you spend less than you earn, and you invest your surplus in bargain-prices, sound, and profitable companies. Your income increases and so does your surplus (remember that your expenses are under control), which allows you to invest more money. You create a virtuous cycle and wealth ensues. This is the simplest way to become a millionaire, and also one of the most fool-proof. Why don’t many more people do it? Because it’s BORING, and IT TAKES TIME. You’re most likely never going to make the cover of Forbes or Money. But make no mistake, it’s one of the very best ways to become a millionaire.
2. Personal Talent. I’m thinking Lebron James (basketball player), Tiger Woods (golf player), Will Smith (actor), David Beckham (soccer player), Jay-Z (rapper), Janet K. Rowling (author) and the list goes on. Those individuals have built their fame and fortune on the basis of a natural talent, whether it be athletic or cerebral. In this century, where mostly everything can be marketed on a global scale, and where technologies such as the Internet have opened up whole new opportunities to cash in on talent, the rise from rags to riches can truly be meteoric (50 Cent). What needs to be pointed out, though, is that the reason why they get to make that much money is because they’ve managed to reach the top. And by definition, there can’t be too many people at the top. Oh and, while they might, on the surface, look like they’ve become millionaires overnight, the reality often is that they’ve toiled for years before finally breaking through.
3. Recognizing Others’ Talent. Producers, agents, and managers are the people that come to my mind under this category. In the music and movie industries, producers are typically richer than the artists they produce (P. Diddy, Scott Torch, Jerry Bruckheimer). Agents and managers in sports, writing, and music (just to name a few) can make millions provided that they manage to build a portfolio of successful clients. There’s no doubt that you can become a millionaire by taking a (roughly) 10% cut on several million-dollar contracts that you negotiate for your clients.
4. Vision. Ever since he came back to Apple’s helm and presided over the company’s renaissance, Steve Jobs has cemented his visionary status. And has banked in not mere millions, but billions in the process. If you have the ability to come up with revolutionary products and/or services, you have a good foundation to turn that ability into millions in the future. Even if you don’t have that creative a mind, you can be inspired by Sam Walton’s success. He didn’t invent anything ground-breaking, but he brought about what would become the juggernaut known today as Walmart, on the simple premise of everyday low prices, and a ruthlessly efficient operation. Better yet, your money-making product or service doesn’t even have to be your idea. It’s reported that Bill Gates paid $50,000 in 1979 to buy the exclusive rights to a computer program called DOS, the disk operating system for minicomputers. His vision was that those little machines would eventually end up everywhere. Was he right or what?

More than anything, this is my personal take on the best ways to become a millionaire. I have no doubt that there are many other avenues to financial wealth, but I believe that in one way or another, they fall within one of those methods. I, of course, welcome any feedback or comment on the subject, especially if you disagree with me.

How To Become A Millionaire

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• Socially Responsible Investing: Go Green And Make Money At The Same Time