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Unfortunately, most people will just skip to this section without reading the first two. I believe this is the least important section of all. Wealth is only important if you have made it a priority in your life as I have. Unless you are willing to fail numerous times with investments, endure painful losses and be embarrassed more than once, the pursuit of true wealth and financial independence is not for you.
Please set realistic financial goals for yourself. If you are married with 3 kids and no money in the bank, it is fairly likely that you are not going to achieve financial independence this year.
Additionally, do the work. Don't believe in get rich quick schemes, and stop referring to the lottery as your retirement plan. The reason only 5% of us are wealthy is that it takes a tremendous amount of research, time, intelligence, commitment and intestinal fortitude to achieve it. Finances are intimidating, but they don't have to be.
I will not tell you specifically where to put your money or what stocks to buy. Those decisions are different for everyone based on your willingness to lose money, sacrifices you are willing to make, and how long you have to wait to be wealthy. I will give you the same guidelines I have been using for the last ten years and some places to go for help.
STEP ONE: Get out of bad debt. The only good debt is the kind that is leading you to a bigger, better payoff in the end. A house is good debt. Credit cards, car payments, student loans are all examples of worthless debt and must be eliminated. You must pay off your credit cards and leave them at a zero balance before anything else. If that seems impossible to you, you are not prepared to make the sacrifices necessary to be wealthy.
STEP ONE AND A HALF: Start a 401k/IRA. This should also be done immediately. There is no excuse on the planet that makes it okay for you to not start a simple retirement plan immediately. The money comes out of your check before taxes and goes into a fund that you get when you retire. Don't let the stock market, Enron stories of late, and your ignorance scare you away. You can go back and adjust your 401k in a few years when you know what you're doing. For now, start the damn fund.
STEP TWO: Buy a house. This will require months of saving up the 10% down payment and adjusting your lifestyle accordingly to afford the monthly payments. Everyone should own a house for a variety of reasons, not the least of which is that it gives you a place of your OWN to call home. It also is the first step in making your money work for you and not someone else. The thing that motivated me the most to begin buying homes at the age of 22 was how angry I got every time I wrote a rent check and realized that someone else was getting wealthy off it.
STEP THREE: Save. Buying a house is not easy and is a very tempting way to waste a lot of money on furniture, curtains, floors, paint, etc. Some of that, of course, is necessary. However, you shouldn't let your home become a money pit. Once again, use discipline. Once you have bought a house, you need to save money and create fund that you never touch which has at least three months living expenses in it all all times. Now that you own a house, getting fired or enduring a financial emergency could ruin you. Don't let it. Always have 3 months living expenses in a bank that you have quick and easy access to. Hopefully, you'll never need it.
STEP FOUR: Start learning. While you are adjusting to your new home and saving money (which may take you months or years) start learning about the other parts of money management and investing. You should research tax laws and find out how some of us have the government pay the majority of our vehicle expenses. You should start asking questions at your bank and make sure you aren't paying fees to them for holding your money. IF you are, threaten to go somewhere else until they give you the answer you like. Call your phone companies and lower your rates. Trust me, it can be done. All of these things will give you more cash to save and begin investing. Perhaps consider getting a stock broker and letting he or she invest some money for you. This requires trust and risk, so you'll have to decide. Eventually, you'll know enough to where you'll take over the whole process, but for now. You can dip your feet in the water.
STEP FIVE: Keep learning. By now, you should see why it takes so long to become wealthy without the help of a lottery win. The worse thing you can do is invest your money without knowing what you're doing. You're better off to leave it in a bank until then. If you lose money on an educated risk investment, at least you knew beforehand what you were getting into. If you lose money because some friend tells you to buy stock in Krispy Kreme donuts, you'll have no idea what you did wrong, and you'll be broke. I bought my first house when I was 22. I started a 401K the next year. It wasn't until I was 29 that I started actually managing my own 401K and making other investments. It took me that long to know what to do. You can go faster, if you choose to learn faster. At this point, you should be watching investment TV programs (daily shows about stock market, etc.) which will seem boring and intimidating at first, but will make total sense to you within weeks. Start reading books about investing, bonds, stocks, etc. Read the business section of the newspaper everyday until it makes sense to you.
STEP SIX: Find a mentor. If you can, find someone you can trust to help you with all of the above things. You don't have to have a mentor, but it will increase your learning curve timetable. Find someone who has begun on the road to being wealthy and become a sponge absorbing as much info as you can from them. Don't let them make your decisions for you, but let them teach you.
STEP SEVEN: Start managing your money. Once you are ready, take control of your financial future. Begin by going to the business department of your workplace and finding out which funds your 401k is invested in. Odds are, they aren't the right ones and you know that. Change the way it's setup. It's your right and your money, so take advantage of it. If Enron employees would have done this, most of them wouldn't have lost all of their retirement at the hands of their greedy bosses. Start buying stocks. Either through a broker, or on-line with E-trade or one of the others. A second house? Rental property? Once you've reached step seven, you'll already know this stuff.
To help you in this process, I recommend the following.
TELEVISION
Fox News Channel easily has the best business shows. Every weekday at 1pm and every Saturday from 7-9am are shows you should be watching.
NEWSPAPERS
The Wall Street Journal is still the bible of investing. Any newspaper's business section is a good place to start
BOOKS
"Rich Dad, Poor Dad." Robert Kiyoaski
"Getting Started in Bonds" Sharon Wright
"Investing Bible" Lynn O Shaugnessy
"How to Pay Zero Taxes" NADN
"Investing for Dummies"
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