Author: Money Maroon

How to negotiate a salary

How To Negotiate A Salary

Money Maroon

At one time or another, you will have to negotiate your salary. It is not that the task is difficult, but it can be nerve racking. No matter your level, your initial negotiated salary is very important. It will be the basis from which you will gain raises over time. A miscalculation here can be very costly. Therefore, here is our how to negotiate a salary guide. If you are asking how to negotiate a salary, remember: (1) know your worth; (2) do not directly answer a question about the salary that you would accept; (3) never accept the first offer; and (4) know that your salary is only a part of your total compensation package.

How to negotiate a salary?

Know Your Worth

How to negotiate a salary 101, you must know your worth. Before you begin the job search, before you get the job offer, know your worth. Do your research. You must know the average salary for the position based on your skill level, the average range of the salary for someone of your abilities and experience for the size of the company that you will be working for. 

You must do this research. This is the only way that you can know if a proposed offer is too high or too low. In doing your research, ask your friends, look online, ask someone at the company in such a manner that they can provide you with the information needed. 

Do Not Give A Direct Answer To The Salary Question

In any interview, you will be told a range of the salary for the position. If one is not given to you, ask for the range. This gives you the bounds of the position, but do not take this as a definite range. If you are good enough, if you are attractive enough professionally, they will offer you more than that range. This is why it is so important to not give a number when asked what salary you are looking for. If answered directly, you may unintentionally lock yourself into a low salary, or turn off the employer by going too high. 

If you are asked a direct question about salary, inform the recruiter that you can negotiate on salary. This in effect continues the conversation. If the interviewers like you, they will pay you. The trick, have the recruiter give you a range. If the range is lower than what you will accept, you can negotiate up to your number if the interviewers like you. 

Never Accept The First Offer

How to negotiate a salary? One of the most important point is to never accept the first offer if the position is not a lock step position. Do not do it. Once an offer is extended, it is typically an invitation to negotiate. Never accept the first offer. If the offer is low, know what your low point is and counter above it. You will know that an offer is low based on your research.

If the offer is in your sweet spot, ask for more. If the offer is above what you think the range is, ask for more. Note that it is unlikely that any employer will match what you come back with in a counteroffer, but they are likely to meet you somewhere in the middle. As such, if your aim is $150,000 and you were offered $140,000, it is advisable to ask for above $150,000. Consider counter offering at $160,000 or above and have the potential employer meet you somewhere in the middle. Do not sell yourself short.

Remember, your first salary at a company will be the basis from which you will gain raises. So the higher your starting point, the faster your salary will grow. Also, typically, 401K packages and other benefits are based on a percentage of that salary. Do not sell yourself short.

Salary Is Not Everything

While your salary is important, it is not everything. When negotiating a salary, it is important to remember that the salary is only one part of your compensation package. If you cannot get the number that you want with regard to a salary, do not forget that you have other options as far as employers but also other areas of your compensation package to negotiate. Think about vacation days, retirement, stock, bonus, transportation and medical coverage to name a few. In some cases, a salary may be lower, however, total compensation may be higher in comparison to another job. The reason for this may be the employer’s health care plan, bonus structure, stock option and retirement plan.

While you may have a salary that is $5,000 lower than a comparably position at another company, you may have a higher 401K match percentage, higher bonus, or receive more stock. As such, while the salary may be lower, your total compensation package may be significantly higher. Therefore, before you accept a compensation package, do a full evaluation.

Conclusion

At one time or another, you will have to negotiate your salary. It is not that the task is difficult, but it can be nerve racking. No matter your level, your initial negotiated salary is very important. It will be the basis from which you will gain raises over time. A miscalculation here can be very costly. Therefore, here is our how to negotiate a salary guide. If you are asking how to negotiate a salary, remember: (1) know your worth; (2) do not directly answer a question about the salary that you would accept; (3) never accept the first offer; and (4) know that your salary is only a part of your total compensation package.

While every situation is different, we sincerely hope that this how to negotiate a salary guide helps you as you look for your next position. Journey to financial independence.

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Video Summary

Happy Mother's Day

Have The Mother’s Day Money Talk

Money Maroon

For Mother’s Day, instead of falling into the commercialization trend, let’s make our mothers proud. Have a Mother’s Day money talk with mom. This talk will not only impact your mother and show her that you are thinking about her future, but will also help you organize yourself to better care for her.  Buying flowers, cards, or taking your mom out for brunch is a nice gesture. But having a financial chat with mom is impactful. Be impactful on this Mother’s Day and show mom how much you truly care.

Sacrifice

On this Mother’s Day, remember the financial sacrifices that your mother has made. Think back to how much your mother worked or complained about her job. Yet, she continued on. While you are at it, it should become very clear why some people stay at jobs that they hate. At times, some people will stay at jobs that they hate in the name of love and responsibility. She did it for you.

Financial Education

Many have the luck of having a mom that inspires. For some, this is manifested in financial success or the search for financial success based on lessons learned. For example, save, invest, live below your means. It may be in the form of literal education or an education based on observation. Was it her struggle or was it her drive and position as an authoritative figure who did what was best for the family that motivates you to become financially independent? For some, it was the unfortunate mismanagement of finances that provided the teaching lessons that motivates today. Whatever your reason, I am confident that your mother contributed and continues to contribute to your reasons for reading a financial independence blog and this article.

Love you mom - Happy Mother's Day

Having The Mother’s Day Talk

With all that your mother has done to influence your financial life, it is time to have a Mother’s Day money talk. Check on her current financial situation and her future plans. Although it may be difficult to talk to family about money, it is important to start.

Previous generations had the now acclaimed three legs to their retirement stool: (1) personal savings, (2) social security and (3) a company pension. Over the years, the three legs have been significantly weakened.

First, many have very little to no personal savings; second, as it currently stands, the social security program is teetering on the edge of insolvency; and  third, for the most part, company pensions are a thing of the past. Taken together, the baby boomer generation have little saved for retirement, no pension plan and are dependent on social security. This is the reason for the talk.

The Talk

To have the money talk with mom, there is no reason to be aggressive. Do not forget that it is Mother’s Day. If you approach your mother’s finances aggressively, your mother is likely to get defensive. The point here is to begin a conversation or continue the conversation such that you know where your mom is financially. More importantly, these conversations will aid your financial planing.

We cannot control what another person does, especially our parents. However, if we can make them aware of potential issues that may be on the horizon, maybe they can and will take action to change course. 

The fact is, you as the child may be responsible for your parents during retirement. It is important that you begin taking steps to mitigate the impact on your financial future by talking to your mom this Mother’s Day. 

The Best Mother’s Day Gift

For most of us, as adults, it becomes a struggle to get the perfect gift for mom. Guess what, you have most likely provided a lot of her material wants over the years. There are only so may cruises, trips, massages, flowers or foods that you can gift mom. At this point, the best Mother’s Day gift may be just showing that you care by having an important conversation. Instead of gifting something that will be used for only a day, have an impactful financial conversation.

Conclusion

For Mother’s Day, instead of falling into the commercialization trend, let’s make our mothers proud. Have a Mother’s Day money talk with mom. This talk will not only impact your mother and show her that you are thinking about her future, but will also help you organize yourself to better care for her.  Buying flowers, cards, or taking your mom out for brunch is a nice gesture. But having a financial chat with mom is impactful. Be impactful on this Mother’s Day and show mom how much you truly care.

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When can I retire

When Can I Retire?

Money Maroon

When can I retire? How can I retire? Where can I retire? These are questions that we all have at one point or another. Sometimes, we begin to ask ourselves these questions once we are a few years into our careers, or at a career/life crossroad. At times, we ask these questions not because we “hate” our jobs. Of course, hating your job will no doubt lead to these questions. More times than not, we ask these questions as a matter of wanting freedom. The freedom to do whatever you want. The freedom to spend the limited time you have on this planet as you want. The problem, for many of us, when can I retire is not a question that is our decision alone. The decision to retire is intricately linked to your financial ability to support your retirement.

Can you retire?

Do You Have Enough 

If you are seriously asking the question of when can I retire, you must appreciate the financial factors that are driving whether or not you can retire. How much do you have in retirement savings/investments? This includes funds that are currently in personal accounts, retirement accounts and government sponsored accounts.

With regard to personal accounts, think about savings, property and investment accounts. With regard to retirement accounts, consider your tax advantage accounts such as roth accounts, 403(b), 457(b) and 401k or related like retirement accounts.  The third component to consider is the value of your government sponsored accounts such as your social security.

Now that you have an inventory of your accounts and their value, consider how much you currently spend? What is your projected spending during retirement? When you retire, will you continue to work part-time or will this be a complete retirement? What you are trying to get an estimate on is your cost of retirement and can you afford it. Well, can you?

Location, Location, Location

You have heard this before? The three things that matter in property is location, location, location. Location not only matters when it comes to property, location also matters when it comes to your retirement. Location matters because it will significantly impact your cost of living. Consider not only the cost of goods but also healthcare and taxes. Also, I forgot, location will also impact the type of life that you will have during retirement. Do you want to be sitting on the beach or do you want to be on a farm? Again, location, location, location.

Your Health

There is no point to wealth if you do not have health. I figure you would not want to be hooked up to an I.V drip while having millions of dollars in the bank. If you do not have good health, it is likely that your retirement will be a very expensive endeavor. So have you been taking care of your health? Who will pay for your healthcare? Are you old enough to be covered by a government subsidized plan or will you be paying out of pocket for an expensive premium? This could seriously impact your retirement plans. So when you ask when can I retire, think not only about your financial health but also your literal health.

When Can I Retire?

When can you retire? Well, it depends at least on the above. It depends on what you have saved for retirement. It also depends on what government sponsored programs you are eligible for, the location where you will retire and also your health. It all matters. Once you are able to assess where you are financially, location wise and your health situation, you will have a very good view of when you can retire. Of course, no plan is perfect and life is unpredictable. Who thought we would have a pandemic in 2020 and the related impact. But as is famously stated, “a dream without a plan is a wish.” Evaluate the situation and have a plan.

Conclusion

When can I retire? How can I retire? Where can I retire? These are questions that we all have at one point or another. Sometimes, we begin to ask ourselves these questions once we are a few years into our careers, or at a career/life crossroad. At times, we ask these questions not because we “hate” our jobs. Of course, hating your job will no doubt lead to these questions. More times than not, we ask these questions as a matter of wanting freedom. The freedom to do whatever you want. The freedom to spend the limited time you have on this planet as you want. The problem, for many of us, when can I retire is not a question that is our decision alone. The decision to retire is intricately linked to your financial ability to support your retirement. Can you?

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Pay off mortgage early

Is It Worth It To Pay Off Mortgage Early

Money Maroon

If you have a mortgage, you have asked if it is worth it to pay off mortgage early? This thought is normal. No one likes to be in debt for a day much less for 30 years.  We all would like to have the freedom to do as we like with our money, and paying a mortgage is not one of those things. But should you pay off your mortgage early? The answer, it is a personal decision.

The Financial Perspective

When you ask if you should pay off mortgage early, you will hear a number of important things to consider. These considerations include the stock market, the mortgage interest deduction, and the potential safety net of having money on hand. 

The stock market argument goes something like this: if you have a mortgage, by paying it off early you will essentially be getting the interest rate of the mortgage that you paid off as a return. As a simplistic example, if you pay off your mortgage that has a 3% interest rate 10 years early, you will have earned 3% per year for that 10 year period. Essentially, the 3% that you did not have to pay. You will then be told that if you had place the same amount of money that you used to pay off your mortgage in the stock market, you would have earned 8-10%. This 8-10% is in reference to the average stock market return over the past decades.

As such, the upshot of the stock market argument is that by paying off your mortgage early, you would be losing out on the difference between the average stock market return and your mortgage interest rate.

Further, you will be informed that your mortgage interest payments are tax deductible. But you would have already known this as your taxes are due yearly and you would have taken advantage of this deduction based on qualifications.

Next, if you pay off your mortgage early, if you ran into hard times, your money would be locked up in your home. The fact is, houses or the money held in your home is not as easily transferable as money in the bank. As such, if you lose your job, or run into financial difficulties, it would be a bit more difficult to unlock the money in your home than going to the bank and withdrawing what is needed. 

These are all considerations that must be contemplated. As such, from a purely financial perspective, the answer to the question of whether or not  to pay off mortgage early looks to be a no.

Pay off mortgage early? It's personal
It’s a personal decision

The Counter To Pay Off Mortgage Early

Why would you ever answer yes to whether or not it is worth it to pay off mortgage early? The answer, life is not as simple as a mathematical calculation. Further, the only thing certain in life is uncertainty.

While there is a historical increase in the stock market on average, we do not know what the future holds. Will the next 30 years see the growth of the last 30 years? It is uncertain. The stock market is risky and your mortgage payment is always due. This is to say that if you lose money in the market, your mortgage is still due. No matter what happens with the stock market, by paying off your mortgage early you have a guaranteed return. I am sure you have heard the saying “a bird in hand is worth two in the bush.”

In view of the mortgage interest deduction, will this deduction continue? Will you continue to qualify for this deduction? This also is unknown. Change is a constant, we just do not known.

Peace Of Mind Is A Reason To Pay Off Mortgage Early

When assessing if it is worth it to pay off mortgage early, consider your peace of mind. Paying off your mortgage early may not make financial sense if you pay off your mortgage early and miss out on a significant stock market return. However, nothing beats being able to sit back in your home and know that it is paid for.  Peace of mind. 

By paying off your home early, you will not have a mortgage payment, therefore you can use that money to spend as you see fit and you will no longer need to worry much about foreclosures or repossessions. Pay your taxes and related utilities and keep on living. This is peace of mind.

What is your peace of mind worth? When assessing if it is worth it to pay off mortgage early, this is the real question. How much better would you sleep knowing that you have no mortgage payment.

In the end, it is your decision and it is about what you are comfortable with. In some ways, you can pay more on your monthly mortgage payment to pay off your mortgage earlier. You may find a middle ground and pay more on your monthly mortgage payment but also invest a portion. It is also your decision to not pay any extra at all toward your monthly mortgage payment. It is about your comfort level and what is good for you and your family.

Conclusion

If you have a mortgage, you have asked if it is worth it to pay off mortgage early? This thought is normal. No one likes to be in debt for a day much less for 30 years.  We all would like to have the freedom to do as we like with our money, and paying a mortgage is not one of those things. But should you pay off your mortgage early? The answer, it is a personal decision. On the journey to financial independence, sometimes, peace of mind is more important than financial returns.

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Never Give UP

Never Give Up

Money Maroon

As I get older, what I have learned time and time again is that it is not about how smart you are. It is really about persistence. Yes, the never give up mentality is one of the most rewarding attribute a person can have. Getting knocked down but getting up and continuing on is a hard lesson to learn. But once you master it, the world is yours.

Never Give Up

Learning To Never Give Up

There are certain things that we are each innately good at, and far more things that we are absolutely terrible at. Throughout our lives, we will discover these things on an almost daily basis. How we deal with these discoveries will have a profound impact on our lives.

Do you recall the first time you tried to ride a bike, or for that matter, attacked a difficult math problem? Our success in learning how to ride a bike or solving a math problem is somewhat based on our mentality, but also those around us who shaped that mentality. For example, if the first time you fell trying to ride a bike your parents rushed to you and gave in to your cries to never get on a bike again, it is highly likely that you will never learn to ride a bike. I know a few individuals where this is a reality. The issue here is much larger than learning to ride a bike, you may potentially develop the mentality of trying, failing and quitting. 

If on the other hand, you fell, and you decided to get up, or your parents or others around you encouraged you to get up and try again, it is highly likely that you eventually learned how to ride a bike. 

Again, this translates to other life events. Now let’s talk about the math problem. The same principle applies. If you are discouraged and give up once you notice that the math problem was difficult, you may never learn how to solve the problem. If you eventually do solve the math problem, you may develop a hatred of math and avoid math at all cost. I am sure you know many individuals who fall into this category.

On the other hand, if you are able to power through the math problem and never give up, not only will you solve the math problem but also appreciate the concept of effort and persistence. These seemingly basic events do have an impactful effect on our lives.

Practice Makes Perfect

Have you ever heard the saying, “Practice makes perfect.” This is only another way of saying never give up. Don’t forget, while Michael Jordan was good, he became great by practicing. For that matter, Usain Bolt lost a number of races before he came into his own and dominate his sport. 

Some call it being stubborn. For others, they are classified as having a short memory. It really does not matter what you call it, it is typically a manifestation of pride, self belief, and the never give up mindset.

To bring this close to home, I am certain that you know individuals who may not have been the best at an activity that came naturally to you. Unbeknownst to you, this individual wanted to get better. As it turns out, while you rested knowing that you were good, they practiced, put in the required work and became better than you. This occurs all the time.

Persistence Pays

I have known individuals who are amazingly smart. They are able to grasp new material ridiculously fast and never had to really study. Many of these individuals never achieved their full potential. They took their gift for granted. They thought everything would come easily. However, when they hit an obstacle, they were unprepared to deal with failure. They did not have the tools, mental strength or sadly, they did not have a support system around them.

On the other hand, I know a number of individuals who were not the best. You know these individuals as well. They were likely middle of the pack with regard to academics, but they worked hard, took the long route, persevered and ended up at the top. These were the individuals who did not make the team on the first try, they did not get accepted to their top choice for college, they were rejected from professional school, but instead of giving up, they went back to the drawing board, reapplied themselves and were able to move forward. 

The fact is, in life, you will hear a lot more no’s than yes. Get use to it. “No” is an opportunity. Rejection builds character. Never give up!

You Will Hear No Far More Times Than Yes

We have all come across individuals who have not heard “no” very often. These individuals cannot handle rejection and if anything, avoid the possibility of getting a rejection or simply flips out if they are rejected. We all know individuals like this. They are typically not fun to be around. An outburst for the simplest thing is typically just around the corner.

Rejection is apart of life, and if viewed in the right context, rejection can be a huge motivational factor in life. Rarely do we make it through life without being rejected. For many overachievers, rejection is their fuel. That person who other’s may say act as if they have a chip on their shoulder did not become driven by always winning. It is rejection that fuels their fire. The agony of defeat built them mentally to never give up.

For others, if the door was close on one path, they never give up, they simply found another way in. The never give up attitude is exemplified in the winners of life. The earlier we can see failure as an opportunity, the more likely it is for us to succeed. This is true in our financial life and otherwise.

Conclusion

As I get older, what I have learned time and time again is that it is not about how smart you are. It  is really about persistence. Yes, the never give up mentality is one of the most rewarding attribute a person can have. Getting knocked down but getting up and continuing on is a hard lesson to learn. But once you master it, the world is yours.

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Growth mindset

Adapt A Growth Mindset Today

Money Maroon

Every once in a while, you will come across something that is so impactful that it will stop you in your tracks. Recently, it was a quote from Nelson Mandela “I never lose, I either win or learn.” The quote is simple yet profound. In reality, it represents a different way of approaching life. This quote is the foundation of a growth mindset. 

Growth mindset and fixed mindset
Growth Mindset

Growth Mindset

The growth mindset is not necessarily natural. We all have fears and are prone to acting for short term gratification. We are also prone to feeling sorry for ourselves and blaming others. The growth mindset on the other hand relates to believing that your success depends on time and effort. Believing that you control your destiny. Believing that you can improve with effort and persistence. This mindset thus leads to embracing challenges, persisting through obstacles, learning from criticism and seeking inspiration in others’ success. Those having this mindset therefore believes that with time and practice, they can achieve. 

Change Your Mindset

We typically have a mix of a growth mindset and a fixed mindset (believing that certain qualities are inborn, fixed, and unchangeable). But it is up to us to take control of our lives and realize that we are in control of our actions and the resulting consequences.

It is up to us to learn from new things/experiences and to view errors as learning opportunities and only a stop on the path to achieving our full potential.

Nelson Mandela

We all know Nelson Mandela’s story. It is amazing and down right inspiring on it’s own. However, the words spoken by Nelson Mandela are truly profound. Nelson Mandela, an amazing optimist, a truly amazing man.

To view life in the context of “I never lose, I either win or learn” is the basis for continual growth.  This is the growth mindset. Viewing failure as an opportunity to learn internally pushes you to seek new experiences and challenges you to better yourself. When you believe that you can get better by challenging yourself and learning, it is easy to understand the correlation between hard work and success. Therefore, you will put in extra time and effort to gain higher achievement.

Growth Mindset In Life

Having a growth mindset in your life, generally, is a good thing. It is never a bad idea to seek knowledge and continue to learn and grow over time.  As this is a financial independence related blog, the following must be addressed. It is important to note that having a growth mindset, more specifically, in your financial life is a great attribute. 

The path to a financially secure life takes patience and the requisite need to learn from your experiences as well as others. Like anything else in life, the more you learn, the better you become. The more you learn about your financial situation, an emergency fund, saving, investing and other financial tools, the better you will become at creating a more financially secure life.

Conclusion

Every once in a while, you will come across something that is so impactful that it will stop you in your tracks. Recently, it was a quote from Nelson Mandela “I never lose, I either win or learn.” The quote is simple yet profound. In reality, it represents a different way of approaching life. This quote is the foundation of a growth mindset. Adapt a growth mindset and journey to financial independence.

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Daylight Saving Time

Use Daylight Saving Time To Super Charge Your Finances

Money Maroon

Each year, many countries go through the process of setting clocks forward in the spring and falling back in the fall. This is the normal progression of observing daylight saving time. This time manipulation invention was put in place to save energy.  By moving clocks forward, people could take advantage of the extra evening daylight rather than wasting energy on lighting. As we try to save energy with daylight saving time, use this yearly interruption to fine tune your financial strategy and retirement. 

The Opportunity

Daylight saving time has a way of catching us off guard each year. When we spring forward, it usually greets us with one hour less sleep. Further, it typically takes weeks for your body to adjust to the new time. Springing forward also leads to longer days and in some parts of the country, the sun will set past 9pm at night in the middle of summer.

However, we are resilient. Overtime, this one hour shift becomes normalize and we continue on with our lives. But there is an opportunity here. The opportunity here is to use daylight saving time as a trigger. A trigger to assess your financial situation. As the time is moved forward in early spring, think financially. Think about getting your taxes completed and filed. Review your financial plan for the year. Look at what you are presently contributing to your 401k, monthly savings, IRA, and brokerage accounts. Adjust your contributions as necessary to put your financial plan in motion to reach your goals.

Use daylight saving time to turbo charge your finances

Daylight Saving Time Recalibration

As we approach the winter months and have to fall back one hour, this component of daylight saving time can be used as a recalibration point. Just as the springing forward can be used as an opportunity to set goals, the falling back period can be used as a trigger to recalibrate. Are you on schedule to achieve your goals? Can you recalibrate to achieve your goals before the year ends? As you fall back in the fall, it is a good time to make adjustments to your financial plan based on life events. The one constant in life is its unpredictability, use the falling back period of daylight saving time as a trigger for financial recalibration.

Fall also provides a time for you to begin to think about the begining of the next year. Get a financial jump start on the next year.

Adjust Your Routine

While daylight saving time has become a routine event, make your financial check ups routine as well. When you spring forward one hour, use this disruption to think about the financial year ahead. When you fall back one hour in fall, think about recalibration. Adjusting your financial plans such that you are able to achieve your goals by year end. If your plans change based on life events, adjust and refine accordingly. Further, a fall financial check up also allows you to plan for the coming year. The earlier you are able to take your financial situation in your own hands and plan ahead, the more rewarding the journey.

Use the disruptive nature of daylight saving time to your advantage. Use this disruption as a trigger to review your financial wellbeing.

Conclusion

Each year, many countries go through the process of setting clocks forward in the spring and falling back in the fall. This is the normal progression of observing daylight saving time. This time manipulation invention was put in place to save energy.  By moving clocks forward, people could take advantage of the extra evening daylight rather than wasting energy on lighting. As we try to save energy with daylight saving, use this yearly interruption to fine tune your financial strategy and retirement. Journey to financial independence.

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Wealth vs Rich

Wealth vs Rich: Do You Know The Difference?

Money Maroon

We throw the words “rich” and “wealthy” around on a daily basis. But have you stopped to think about the differences between the two words? Have you really thought about what it means: wealth vs rich? Which would you rather be, wealthy or rich? Your answer to these questions provide an instant reflection on your true understanding of these words.

Wealth vs Rich
Wealth vs Rich

Wealth vs Rich

Daily, you will hear someone say that they want to be rich. This person may even be you. However, rarely will you hear the pronouncement “I want to be wealthy.”  Why is this the case? I suspect that most people use these words rich and wealth interchangeably. Further, most folks are familiar with the term “rich “ and as such, they use the term as a default.

But the terms are not the same, and should not be used interchangeably. One of the biggest error people make is not noticing the subtle difference between being rich and being wealthy. Wealth vs rich, you must know the difference.

By Definition

According to Merriam Webster’s online dictionary, rich is “having abundant possessions and especially material wealth.” Notice that that definition says nothing about time and can but not necessarily reflect value. As such, you can be rich but financially poor. However, wealth according to Merriam Webster’s online dictionary is “abundance of valuable material possessions or resources.” Do you see the difference? The difference is the term “valuable.” It is a matter of having abundant possessions vs having an abundance of valuable material possessions. Which would you rather?

Wealth vs Rich, Know the difference
Wealth vs Rich, Know the difference

Value

Based on the definitions provided, to be rich you necessarily need an abundance of possessions. However, these possessions need not have value. As such, I may have my riches in air, ice or grass for example. All of which have little value in today’s economy. To be rich, your riches need not project great financial value. 

Wealth, on the other hand, is by definition an abundances of valuable possessions or resources. To be wealthy, you must have possessions rich in value. 

So again I ask the question, wealth vs rich? I hope that by this point your aim is to be wealthy, to have possessions rich in value. This may be reflected in your time, or a material possession such as money or property. But, on a basic level, aim to be more than rich. So stop saying that you want to be rich and instead tell the world that you want to be wealthy.

Conclusion

We throw the words “rich” and “wealthy” around on a daily basis. Think about what the words truly mean: wealth vs rich. If you really appreciate the differences between the two words, you will stop saying that you want to be rich and instead proclaim that you want to be wealthy. Aim to be wealthy and have a richness of value on your journey to financial independence.

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Investing to riches

How To Become Rich

Money Maroon

So you want to know how to become rich. Well, who doesn’t. If you perform a quick search, you will find that there are countless discussions and advice for getting rich. While there are ways such as inheriting money or winning something akin to a lottery, becoming rich takes repetitive actions over time. To become rich, you must incrementally increase your riches through actions over time. That’s right, sorry to disappoint, but it will likely not occur over night. Becoming rich is likely a long term endeavor.

Do You Really Want To Be Rich?

How to become rich
Being rich vs being wealthy – Know the difference

Before we jump into how to become rich, do you actually want to become rich? One of the biggest error people make is not noticing the subtle difference between being rich and being wealthy. 

According to Merriam Webster’s online dictionary, rich is “having abundant possessions and especially material wealth.” Notice that that definition says nothing about time and value. As such, you can be rich today and broke tomorrow. However, wealth according to Merriam Webster’s online dictionary is “abundance of valuable material possessions or resources.” Do you see the difference. An abundance of valuable material possession or resources. Therefore, wealth is unlikely to be lost as fast as riches. So, are you seeking wealth or riches?

So You Want To Be Rich

If riches is what you want, as mentioned above, it takes action over time. For example, it is a matter of getting from 50 cents to a dollar and amplifying this effect over time. The more the increase from baseline (in the example, 50 cents) and the more time allowed for compounding, the richer you will become. Typically, to achieve this effect, it requires earning more.

Earning More By Investing 

How to become rich: invest
How to become rich – invest

How do you earn more? To earn more, you need to invest. On a basic level, whether you are an entrepreneur or a salaried employee, to increase your take home pay you must invest in yourself.

To earn more, you can invest your time in finding a higher paying job or take the path of investing in your education. In both cases, you are investing your time and potentially money to increase your chances of obtaining a higher paying job. 

You also have the option of investing in being better at your current place of employment. While there are no guarantees that this will lead to a promotion, performing well in your current role does increase your chances for a promotion and an increased salary.

There are also external opportunities to invest and grow your riches. Whether this is in the stock market or in real estate, it becomes a matter of allowing your money to work for you while you are doing something else. This provides an additive benefit to whatever it is that you are earning from current/future employment.

The Take Home Message

The simple answer to how to become rich is to take small steps everyday to increase your riches and over time you will achieve your goal. That is it. 

Of course, the underlying actions that you take are situational and are up to you. The simple math is riches = assets – debts. As such, if you are able to earn more while lowering costs over time, you will have an abundance. However, we must impress upon you that on this journey, rarely are there short cuts.

Conclusion

While there are many discussions and advice on the topic of how to become rich, do not lose sight of the fact that achieving this goal likely takes repetitive actions over time. To have an abundance, incrementally increase your riches through small actions over time.

Always keep in mind that accumulating riches will likely not occur over night. Becoming rich is likely a long term endeavor. Do not get discourage. Stay the course.

To conclude, becoming rich is a stop on your journey to financial independence, but having wealth may be your ultimate goal.

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Financial Mistake

This Financial Mistake Is Making You Poor

Money Maroon

When asked what their biggest money mistake was, many people will respond that their biggest financial mistake is something they bought. Whether it is a house, a car or their education, the answer typically given is an active financial act that has been taken. But the question is not what is the biggest purchase that you have made that you now regret. The question is, what is your biggest money mistake. The biggest financial mistake that you likely have made and may continue to make is not what you have purchased, it is what you have not yet done.

Lost Opportunity

Your biggest financial mistake is likely not a purchase that you have made. Surprisingly, your greatest financial mistake is typically a decision that you did not make. It is, lost opportunity. 

If the opportunity was taken and worked out in your favor, it is not a mistake and as such the decision would not fall into the category of a financial mistake. On the other hand, if a lost opportunity is a mistake, the size of the mistake only grows. The reason for this is the opportunity cost and the compounding of that mistake. For example, think about not taking a job or not continuing your education. 

If these decisions worked in your favor, it would have been a boon. However, if these decisions were in fact a mistake, when looking back, you will see the opportunity lost in your career earnings, relationships, status and financial security. These losses will only compound over time. The mistake will only grow. 

But do understand that this works in the other direction as well. By doing your research, due diligence and making a good decision, the benefits here only compound. Make a great financial decision today and enjoy the compounding benefits over your life time.

The Financial Mistake Of Not Saving Earlier

Financially, your biggest mistake is likely that you did not begin saving earlier. With regard to saving, consider the opportunities that you have missed out on because of lack of funds. Think of the turmoil that you may have experienced during one of the many financial downturns over the last number of decades. How different would that have been if you had been saving earlier?

Saving is the basis of any financial plan. Without effectively saving, you will not build an emergency fund to ride out the financial bumps in life. Sadly, the importance of saving usually dawns on us during a financially rocky situation. For example, it is only when you lose a high paying job that you think of how much you have wasted on nonsense. Think of professional athletes, lawyers and doctors. The financial regrets only comes after going through a financial rut.

Did you lose a house or other financial possessions? Think of what you could have done with an emergency fund. If you have not yet began saving, do not allow this financial mistake to compound. Begin saving today.

The Financial Mistake Of Not Investing Earlier

Consider if you had only knew then what you know today. What would you have done differently? If there were no time machine, as there current is not, how can you implement your learnings today and benefit going forward.

On average, over the last 30 years, the stock market has given a return of between 7-10%. Imagine if you had place a portion of your money 20 years ago into the stock market and continually did so. You would have most likely been a millionaire at this time.

The fact is, with compounding, it really does not take that much. It only a little money but a lot of time. Use the many financial calculators that they currently have. You will notice that with an average of investing  let us say for simplicity about $100 per month for 20 years, the amount that you gain overtime is remarkable to put it lightly. 

Your biggest financial mistake is not investing earlier.

Financial Mistake
Invest in your financial education

The Financial Mistake Of Not Investing In Your Financial Education Earlier

Knowing that you should save, invest, and reduce debt is the basis of long term financial success. This is in fact the basis of financial education. You must save to have money to invest.  Without saving and investing, your money does not grow. Further, no matter how much you may save or invest, you will not get financially far if your funds are going to interest payments on debt.

Somewhere along the way we all have a financial wake up call. It could be by learning through others or learning a tough financial lesson ourselves. But, at some  point or another, we will realize that we should save more, invest more, and have less debt. I did not say that we will all act upon this realization. Some of us do while others do not.

This is like anything else in life. While we know what is best for us, we may never act. For example, at a certain time in our lives we will realize that we are getting older and need to start thinking about retirement. In this case, many of us continue living it up while others make a change. As another example, at a certain time in our lives, we realize that we should get healthy. Some of us make changes while others continue to have an unhealthy lifestyle. 

Financially, it is the same. We know that the more we invest in our financial education, the more likely we are to succeed financially. Yet, most of us rate having a chat about money as near the bottom of the events that we want to do. Most of us refuse to learn about debt and compounding. Most of us engage in keeping up with the Jones instead of focusing on our financial reality. Yes, a lot of us are stuck in the “fake it till you make it” phase of life. This does not work in the long run.

Take hold of your financial situation and invest in your financial education today. The more you learn today, the greater your potential for tomorrow. Your future self will thank you.

Conclusion

When asked what their biggest money mistake is, many people will respond that their biggest financial mistake is something they bought. Whether it is a house, a car or their education, the answer typically given is an active financial act that has been taken. But the question is not what is the biggest purchase that you have made that you now regret. The question is, what is your biggest money mistake. The biggest financial mistake that you likely have made and may continue to make is not what you have purchased, it is what you have not yet done. Stop making financial mistakes and journey to financial independence.

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