Wealth

Billionaire

The Billionaire And You

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The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

The Billionaire Compared To The Average Person

To get a full and clear understanding of what it means to be a billionaire, let us compare to the average household. In this comparison, we use the median household income because the median provides a better representation of central tendency as compared to the mean. Essentially, the median income gives us a better view of the average household income because the mean can be skewed by those in the super rich/super poor.

The median household income was $68,703 in 2019. In most parts of the US, the cost of rent/mortgage + child care would easily exceed this amount. But let us put this total in the context of a billionaire. If we do the simple math of $1 billion divided by $68,703, it tells us that it would take a person/family making $68,703 a year 14555 years to earn $1 billion. To be clear, it would take a household making the median income over 14 thousand years to earn a billion dollars. This is absolutely eye opening.

This further demonstrates why it is so financially dangerous to try and keep up with the Jones. The wealth disparity between you and the Jones can be so vast that it can take thousands of life times to amass comparable resources.

Billionaires

When we talk about billionaires, we must acknowledge those who have risen to this level of wealth. This includes Jeff Bezos, Elon Musk, Mark Zuckerberg, Warren Buffet and Bill Gates. These individuals have done extraordinary things and do deserve their wealth. But you can’t help but ask, when is enough, enough? With such accumulation of wealth, what is the plan? We know that if these individuals try, it would be a monumental task to try and succeed in spending all this money. No matter the interest rate or the return on investment, a billion dollars will accumulate so much on a yearly basis that it is really almost impossible to dispose of such sums of money. Not too many billionaires go broke.

Billionaire Fortunes Since The Pandemic

As our conversation about billionaires continue, it becomes factually crazy that many of these individuals have increased their wealth during the pandemic. For example, Jeff Bezos is reported to have increased his wealth by about $70 billion and Elon Musk has reportedly increased his wealth by about $132 billion. While the math is simple, the more you have the more you can make, it is mind blowing to imagine the difference between someone of Jeff Bezos’s wealth and that of the median household. It is a matter of $187 billion vs $69 thousand ($187,000,000,000 vs $69,000). The difference is a lot of zeros.

While the average household is thinking about mortgage/rent and child care, billionaires are thinking about legacy. And why not, the financial difference is truly a sight to see. The simple fact is, the purchase of a mega yacht to a billionaire may be comparable to you purchasing a shoe. While the cost matters, it does not change your life financially. Keep this in mind the next time you hear of someone purchasing a mega yacht, helicopter or an island. The billionaires can afford it.

Billionaire
I want to be a billionaire, don’t you?

Conclusion

The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

So why did we write this article. We wrote this article to show that we sometimes do not truly appreciate the sums of money that we discuss on a daily basis. It is only when we break it down and compare do we begin to see the full scope. Next time you hear/see the term “billionaire” realize that it would take the average household over 14 thousand years to earn that sum. 

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How to negotiate a salary

How To Negotiate A Salary

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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

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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?

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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

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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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Daylight Saving Time

Use Daylight Saving Time To Super Charge Your Finances

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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?

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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

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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

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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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Teaching Kids About Money

Teaching Kids About Money

Money Maroon

One of the most important things that you can do in life is teaching your kids about money. Teaching kids about money is a proactive way to ensure that the next generation is financially literate. It may seem like another thing on the list to do as a parent, however, teaching kids about money can be as easy as playing a game or just including them in day to day activities. To teach your kids about money, take your kids on your daily money adventures.

Teaching Kids About Money Must Start Early

Having a financial foundation is all about starting early. While you may quickly accumulate wealth in some instances, the magic of compounding requires time. As such, start saving early. 

The easiest avenue to teaching kids about money is to start saving early. Yes, the good ole piggy bank. This is one of the earliest and easiest ways to get your kids to think about money.  Even kids love to see their money grow.

The piggy bank provides for a lot of teaching opportunities. For example, the piggy bank can be used to teach the concept of saving toward a goal. If your kid wants to buy something, have them understand how long it will take for them to save that amount based on their standard allowance. It need not be a big purchase, for example, if they want to buy candy, you can mention that they will need to save/take an amount from their piggy bank. This will no doubt trigger an internal conflict of money vs candy. They will have to decide whether or not the candy is really worth their money.

But most importantly, the piggy bank forces kids to adapt a habit of saving. Saving is a habit that can be beneficial if learned early.

Teaching kids about money
Our kids are the future

Making Purchases

Your kids like new gadgets, so does everyone. How do you pay for it? Typically with a credit card? Teaching kids about money involves teaching them about your purchases. Show them the bill and how much things costs. Show them how you purchased it, cash or credit. If you are using a credit card, this is the perfect time to discuss interest rates.  You can further venture into the concept of paying off credit card bills early such that you do not have to pay interest payments.  The magic of compounding and how this can work to your benefit in saving but to your detriment on money you owe will no doubt hold their attention. Importantly, the concept of not purchasing things that you cannot afford will be a natural progression.

Going To The Bank

Like many other things as a parent, get your kids involved in your financial decisions. They may not understand, however, the act of going through the process will be built in. When old enough, they will begin to understand. Teaching kids about money is about sparking financial curiosity and planting a financial seed that will flourish and pay dividends in the future.

For example, on each journey to the bank, consider taking your child. Kids are curious creatures and they will ask numerous questions about the bank. Why are you going to the bank? Why are you depositing money? Where did you get the money from? Do you get it back? These are all questions that will spark a conversation with regard to earning money, using money, and saving money.

These early conversations with your 3-5 year old will begin to inform their concept of money. Have you ever taken money from your kids piggy bank and try to deposit it in the bank? If you have not, this process is likely to create a mental break down for any child. They become very attached to their money. However, this process provides the perfect opportunity to have a discussion with regard to the function of a bank, interest rates, and possibly inflation. No kid wants to have their money taken away. By explaining why their money will earn more if it is put to work (in the bank/investment account) will put them at ease and be a great benefit in the future.

Monopoly Money

Teaching kids about money at times can be a simple matter of playing a game. In many ways, monopoly is the perfect game. Monopoly can accomplish multiple things. Monopoly is not only a fun game for family time. Playing monopoly can also help kids learn to add, subtract, and also teach your child to handle or at the very least begin to get an appreciation of money.

Think about it, where else would a kid learn about charging rent, bankruptcy, going to jail, getting paid a scheduled salary, trading property, and transacting with a bank? Monopoly teaches simple concepts in game form. (1) If you own property, you can charge rent. (2) If you invest in your property, by building a hotel, you can charge even more. (3) If you over extend yourself financially, you can go bankrupt. The concepts are all there, and your kids will learn them all without trying.

Conclusion

One of the most important things that you can do is teaching your kids about money. Teaching kids about money is a proactive way to ensure that the next generation is financially literate. It may seem like another thing on the list to do as a parent, however, teaching kids about money can be as easy as playing a game or just including them in day to day activities. To teach your kids about money, take your kids on your daily money adventures. Help your kids get on the journey to financial independence early.

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