There are a number of different foundational principles that are responsible for ruling the wealth building cycle, regardless of how you build your wealth. So if you build your wealth on the stock market, or through home loans, or through a variety of other types of real estate investments, this will still apply. Many people who are new to the concept of wealth building are not disciplined enough or not informed enough to follow the principles associated with properly building wealth. The formula used to build wealth is actually extremely simple and straight forward in theory -

1 - Make more money,

2 - Spend less money,

3 - Start early,

4 - Manage all of the risks.

It may sound easy, but it isn't really that easy, is it? There is a lot that goes into these four steps, and most people have trouble dealing with one or two, let alone all four of them.

The wealth building cycle consists of three phases - Goal setting, planning and execution.

1 - Define the goals of your wealth building process, including both short term goals and long term goals.

Goal setting should begin with a number of questions. Where do you want to be, financially speaking, in five years? How about 20 years from now? What about by the time you retire? Do you plan to own half a million dollars in real estate five years from now? Are you looking to accumulate a net wealth of two million dollars within twenty years? Would you like to have five million dollars in your bank account by the time you retire? The principal of setting wealth building goals should be to challenge you while still being realistic. If your goals are set too low, you will not be motivated. If they are set too high, you will become frustrated at their unreachability.

2 - Develop a plan that will achieve the goals you have set -

We are not going to know if your goals are set too high or too low until you use a plan to justify them. Many investors believe that a million dollars in net worth is unthinkable, but it really isn't. If you want to achieve a million dollar goal, you shouldn't have to choose between eating well and sleeping well, you just have to know how to invest, and be patient.

3 - Follow your plan, and work as hard as you need to -

In wealth building, there are two common causes for failure. The first is not being committed to the plan and working hard enough, and the second is not having the necessary discipline in order to follow the plan even if you are working hard.

Once you have completed the wealth building cycle, the next cycle begins, using return on investment in conjunction with your investing and wealth building strategies. Wealth building is a simple process, and only requires a plan and some serious determination in order to get things done.