Many people believe that wealth and happiness go hand in hand. The more you have, the happier you will be. This is not always the case, but there is research that shows that the more income an individual makes the more positive feelings they have, and the more satisfaction they have in life. You can read that research here.
Guidance on our financial journey is crucial. It doesn’t mean that we need to have someone managing our money or taking care of it for us, because many successful and well off individuals recommend you manage your own money and simply invest into the S&P 500. There are many strategies, tactics and techniques. The late night tv pitches for riches. The list goes on and on.
Today however, we’re focusing on the concrete things that connect to your life. The time tested advise shared my financial advisors, without the cost of seeing them! This advice is solid, time tested and allows you to continue to evolve and move up levels. Think of it like a video game for your finances, now let’s gamify them!
The 3 Stages Of Wealth Growth
Stage #1: Financial Stability
This is the stage that 99% of the population starts out at. Unless you’re a trust fund baby and have no care in the world, you’re going to have to focus on financial stability first. What does that mean? It means that your bills are paid every time, on time. It means that you have paid off your debt entirely and it means that you can begin socking money away each month into savings. This is the most basic level of financial education and it’s absolutely crucial to achieve this before moving onto the next step. Cover those ground bases first, then we can dream about exotic vacations and sipping mai tai’s on the beach in Costa Rica!
The TRAP: The trap here is that you want to buy that new car. You want to have nice clothes, the best fine dining and everything in between. You need to be able to sacrifice and say no. Delayed gratification builds wealth in the long run.
Stage #2: Financial Strategy
In this stage you’re focused on strategy and investing. In stage one you worked hard for your money. Stage #2 is about making your money work hard for you. Investing into stocks, real estate, cryptocurrencies, and other assets. Remember, liabilities are things that take money out of your pocket each month. Stage #1 is about making sure that these liabilities are financially covered. Stage #2 is about ensuring that the money that you have beyond bills is dedicated to acquiring equity in companies and assets that appreciate in value over time. Many of the worlds wealthiest individuals recommend simply dollar cost averaging your investment into the S&P 500. Dollar cost averaging simply means you put a set amount into the S&P 500 regardless of whether the market is up or down. Over time the market goes up, so this investment appreciates over time and grows in value.
The TRAP: The trap here is to see this extra income and skip out on the dollar cost averaging into your investments. To say, ahh, I can skip one week or this month and I’ll start again next month. Consistency and commitment to your plan is what builds wealth over the long run. There will always be a new and shiny object to buy. Don’t fall for it!
Stage #3 Financial Security & Independence
At this stage you have your bases covered (stage #1) and you have your investments growing and appreciating (stage #2). At this level you can dial in these systems even further and ensure that your liabilities (cost of living) either stay the same, or decrease by being smart and your assets continue to grow and multiply. Maybe you have 3 rental properties, and now you have some extra money from these rentals and you buy a 4th rental house. Think of the game monopoly at this level. The game is halfway through, and you just need to complete that purchase of that final home or hotel to get more rent, to win the game.
The TRAP: The trap here is that you have to stay in the same mindset of stage #2. It is actually important to enjoy life and splurge on the things you love. You’ve worked hard, you’ve saved and invested. You earned a night on the town, or a trip to Costa Rica! Don’t get caught in the loop of generating never-ending wealth with a mentality and mindset that cannot even enjoy it!
The Single Biggest Wealth Building Lesson is…
The single biggest lesson to take away from this is that the wealthy ALWAYS live below their means. It’s a very simple equation. The money coming in should be higher than the money going out each month when the bills are due. If this is not the case, it will be very challenging to build and grow wealth over time. Live below your means and find ways to invest in stocks, cryptocurrency, real estate. There are also websites to invest in startup companies such as StartEngine and WeFunder.com that have yielded good results for me. These do come with more risk, so risk less money.
You can get started trading stocks with the app robinhood by clicking here and downloading it.
You can begin investing in real estate today without ever even seeing a property, bidding or having a real estate agent by simply using a platform called Groundfloor.com.
There are always opportunities to invest money and grow wealth. You need to be able to have that expendable income to invest however and that starts with living below your means and making wise decisions in the first place. Money in needs to be greater than money out. Simple rule, and the simplest way to build wealth!
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