Building
wealth is a continuation of wealth building. The concepts of work ethic, saving
money and net worth will also be continued.
In 1961, I was working as a gas station attendant. One of my customers somehow let it be known that he had earned $25,000 the previous year. At the time, a factory worker was making about $5,000.
I immediately started to search for something that I could do that would make that much money. I grew up in a middle class neighborhood and knew those were my "roots" and would continue to be my values. But, I desperately wanted financial security.
Becoming financially secure became my objective and my dream. I knew I had to set goals and achieve them. I had an understanding of how compound interest could make money work for me. But, first, I had to make money, if I was going to be building wealth.
Before I could make the money, I needed to get the education necessary. That meant college and maybe beyond. I had already saved enough for 4 years of college. Remember, that was 1961.
There is an old cliche': "Insanity is doing the same thing over and over and expecting a different result." Accordingly, if you are poor, stop doing whatever you are doing. It is not working! If you are rich, continue what you are doing. It is working! Rich people understand money and how to use it. They scrimp and save and invest their money. And once in a while they spend it. Look at Wealth Building and the book by Dr. Stanley, The Millionaire Next Door to learn more about what millionaires do and don't do. |
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Most Americans are not wealthy. That surprises me - it
always has. However, people around the world want to get to America. They
believe that everyone in America is wealthy. What is true about America is that
there is almost unlimited opportunity here. You can be wealthy.
Even the wealthy need to control their spending. I learned, long ago, that those who live in luxurious houses and drive expensive cars are seldom wealthy. They are often trying to impress others rather than living within their means. They may have a large mortgage on their home and lease or finance their cars.
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Another example of those who need to control their spending are lottery winners and professional athletes. Many of them have little prior experience handling their millions and have spent beyond their means until the money is gone. Some even file for bankruptcy. Unfortunately, we live in a society that promotes spending. But, we have a choice. We can spend or save. If you make good financial choices throughout your life, you will have a better retirement. Others will refer to you as being "lucky". You will know that it was not luck - just better planning as you were building wealth. |
It is the difference between your assets (what you own) and your liabilities (what you owe). That is your wealth. I have calculated by net worth every month for many years. You should do it at least once a year. If you own a home, the value of the home is an asset and if you have a mortgage, that is a liability. My parents encouraged me to own a home. Their argument was that everyone needs a place to stay and when you pay the rent, it is gone. Whereas, historically, a home increases in value and as you pay off the mortgage, you accumulate equity. |
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I often refinanced my home as interest rates declined. In
addition, I paid more than the required payment and saved thousands of dollars
in interest payments.
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Regarding a Budget:
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As you save for your retirement, live within or below your "means". During retirement you
may be able to live above your "means".
But, all too often, stuff will happen to sabotage the best made plans. You,
however, with proper saving and investments will have a financially secure
retirement.
Find a reputable certified financial planner to invest in mutual funds. Remember, you must be willing to take some risk in order to get the reward that you want.
Protect your home and automobile and health with the corresponding insurance.
I am not a financial advisor. Accordingly the information presented is for informational purposes only. It is not financial advice.
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