“If you are poor today, it is YOUR fault. Your life is a direct reflection of your thoughts and your actions. The resources and education are out there for you to succeed. So if you’re not taking advantage of them today, then that is a CHOICE.”
This is loose quote from Patrick Bet David in a recent video on generational wealth strategies. While I think there are exceptions to the quote, overall it’s 100% clear that the information for nearly ANYTHING you’re looking to achieve exists today.
There is endless education on what TO DO, but we’re going to take some to outline WHAT TO AVOID DOING if you’re poor today but would prefer to be WEALTHY.
Sometimes it feels like no matter how much money you make, it’s never enough, right? You have a high income and some investments, but you don't seem to reach the level you want. Now is a great time to stop and consider how your current financial habits keep you from getting where you want to go. Some of these are big, and some seem simplistic, but each can stop you from achieving your financial goals.
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It’s the easiest thing in the world to spend more money than you earn, and it's the number one obstacle to building wealth. If you spend everything you bring in or more, you can't save and invest. That means you don’t make progress—you never get ahead because you are holding yourself back. Even when you get a raise, you may be tempted to say, "now I can finally get that new car/house/boat/computer," instead of putting the increase to good use by letting it grow.
How can you ensure that you don't spend more than you earn? First, always automate saving and investing. Save at least ten percent of what you earn and consider adding each salary increase to the savings amount. Instead of spending more, save more.
Credit is a vital part of financial planning, and access to credit is essential. However, using credit can be very expensive. For example, suppose you have a travel reward card and use it to make purchases, perhaps even pay bills with it. You feel good about it because you earn points for airline tickets or even cash back. That’s a great idea, as long as you don’t cancel the benefit by paying interest on those purchases.
The credit card issuer is counting on you not paying off the entire balance each month. That's how they make money (they also get a small percentage from the merchant in many cases.) Interest charges kick in if you pay less than the total amount you spent one month. Your rate depends partly on your credit situation, but it’s rarely minimal. You can take years to pay off a small balance if you only make the minimum payment each month, even if you never use the card again. This fact is one reason why many card issuers offer "zero interest balance transfer." Once you transfer your balance from another card in response to their short-time zero-interest offer, you will likely use their card. Any new charges will incur interest. Eventually, the transferred balance will incur interest charges unless you pay it off before the offer expires.
Paying interest for some things (like a mortgage or even a car loan) is part of sound financial stewardship. However, paying 12, 15, or 20 percent interest for things you bought last year and can’t recall is poor planning.
A budget isn't always a restriction. Instead, it is a planning tool that lets you completely understand your financial condition. Budgeting doesn't mean not buying bistro coffee (although that habit is almost always a good one to cut). Instead, it means accounting for what you earn and spends to ensure you progress toward your financial goals.
Creating a budget can be very simple. You already know most of the big things you spend money on—including your car loan, mortgage, insurance, groceries, utilities, and other essentials. However, you may sense that you spend more on optional items like entertainment (eating out is a category that tends to absorb far more spending than most people realize), streaming and other services, and other untracked expenditures.
This habit is one of the most short-sighted. When you work for an organization that offers you access to a 401(k) (or a similar version for nonprofits designated as a 403(b)), you should always maximize your contributions. First, the money you save in a 401(k) account is not taxed. Let’s say your tax bracket for income is 30 percent. If you earn $1000, you get to use $700. But if you divert that $1000 to your 401(k) account, you can use the entire $1000. Keep in mind that any earnings in the account are also tax-deferred, so if that $1000 grows to $2000, you don’t pay taxes on the growth until you withdraw money from the account.
But there’s more. Most employers that offer a 401(k) contribute something as well, usually a match of part of what you contribute. If your employer matches 50 percent of your contribution, that's $500. So right away, your $1000 (only worth $700 to you if you spend it) becomes $1,500. It’s impossible to reliably duplicate that kind of growth anywhere else. Leave the money in your 401(k) to grow, and it will build for your retirement.
How can I save and invest when I have all these daily expenses? It’s a great question, and the answer is remarkably simple: reduce costs below income so you can save and invest. The money you spend on most things does not contribute to your financial growth. The main exception is your mortgage, which helps you accumulate equity in your home. Using your income to invest in real estate or other options like stocks can help you by multiplying the money you have. (Even real estate can lose value, like other investments.)
One of the HIGHEST value returns on investment you could possibly do, is find amazing resources for FREE education. Without a doubt, one of the BEST resources for free investing education is the Resource section on Saintinvestment.com. There are tons of posts, blogs, and videos on a variety of topics ranging from Real Estate to entrepreneurship to investing go to the resources section on the saintinvestment.com site.
Also, if you want to review one of the BEST strategies for organizing your expenses to invest rapidly and GROW YOUR NET WORTH LIKE A LEGEND, check out on my youtube channel an amazing video explaining the 50/30/20 rule. This strategy allows you to group expenses in a way where you are GUARANTEED to have a significant amount go towards your investment goals and building your future with CONFIDENCE.
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.
