The keys to wealth. Hint: It's really simple
THE STACK #2Managing your finances should never be complicated.
So many of us get stressed out financially because we try to hit too many unrealistic goals and expectations.
We are given 50-page road maps and 25 “baby” steps. I'm here to tell you to STOP DOING THE MOST and Keep it Super Simple.
I don’t know about you, but I like to keep everything simple. I don’t want to spend hours obsessing over financial statements (who has that kind of time anyway?).
This is why I have summed up the key steps everyone needs to take that could lead them toward financial freedom.
Let's get into it.
THE STACK
1. Your living expenses should ALWAYS be below your income
In other words, live below your means. I know, I know, you’ve heard that a thousand times, but it’s true.
A six-figure income with six-figure expenses = 0 wealth.
The basic building block of wealth is using the money we have to make more money.
You will never be financially free if you spend every dollar you make.
Get into the habit of setting aside an amount or percentage of your income, no matter how small.
Use that to:
Save for emergencies
Save for short-term goals
Invest
2. Keep your consumer debt low
Consumerism has become a plague in our society, and debt is advertised so recklessly, so much so that it has now been normalized.
Avoid debt altogether, but I know that's unrealistic for most people.
Consumer debt eats away at our cash flow, making it difficult to live below our means, so keep debt as minimal as possible.
3. Always invest
Investing is simply putting your money into a venture (shares, bonds, property) with an expectation to yield a profit (return on investment).
You might think that investing is something only “rich” people do, but investing is HOW people get rich.
Get into the habit of investing consistently and let your money work hard for you.
4. Enjoy your money
You’re probably not used to hearing this, but there is no point in working so hard for money if all we’re going to do is hoard it or spend it on things that don’t give us joy.
If you’ve set aside money for emergencies, your short-term goals and investing, you have every right to spend your money in whatever way pleases you, and you should do it absolutely guilt-free!
Splurge on the things that give you joy, and don’t waste a dime on anything that takes away from your peace.
There you have it; it really is that simple.
You will be on a sure path to wealth if you follow these steps consistently.
THE TOOL
Keeping track of your net worth is a great way for you to track your progress to wealth.
I love to use the Wealthica App for this.
It helps me keep track of my assets and liabilities.
I can track all my investments and see when I get paid dividends.
THE ACCOUNTABILITY
If you haven't yet created your financial goals for this year, I want you to think of goals you can create in these four key areas.
Ask yourself these questions:
1. How can I increase my income?
2. How much can I pay off this year?
3. How much can I invest this year?
4. How can I enjoy more of my money this year?
And create a goal that is:
Specific
Measurable
Achievable
Realistic and
Time-bound
THE COURAGE
THE KNOWLEDGE
ASSET
An asset is something you own that provides a potential present or future value.
Example: You own a house currently valued at $600,000. The house is your asset.
LIABILITY
A liability is something you owe.
Example: You have a house valued at $600,000, and your mortgage is $550,000. Your liability is a mortgage of $550,000.
NET WORTH
Your net worth is your ASSETS - LIABILITIES
Simply put, your net worth is what you own - what you owe.
Using the examples above, your net worth will be:
Asset - Liability
House value - Mortgage
$600,000 - $550,000
= $50,000
That's it for this week's STACK!
Talk to you next week,
But until then...Keep Stacking!
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