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Maintaining wealth

Maintaining Wealth: Generational Wealth Part: 2

Money Maroon

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

The secret to maintaining your financial position is to perform and maintain the habits that got you where you are today. You must live below your means, save, and invest. Let us digĀ  into this a bit more.

Maintaining your wealth

Maintain Wealth By Living Below Your Means

If you did the hard work of accumulating the abundance that you enjoy today, and thereafter believe that you have arrived and now begin to live above your means, you will lose what you have accumulated in an instant. To maintain your financial position, continue to live below your means. Imagine having two million dollars and purchasing a million dollar home and a new car.  If you are foolish enough to take the described actions, your financial holdings will immediately take a significant hit. Further, if you also decide to upgrade other areas of your life, it is only a matter of time before you begin to live pay check to pay check. 

Do not fall into the trap of keeping up with the jones. Do not fall prey to the trappings of others. You lived below your means to accumulate what you have, live below your means to maintain and grow your wealth.

Continue To Save

To achieve financial independence, you must save. To maintain your financial independence, saving is also a necessary step. If you are spending all that you make, unexpected expenses will slowly over time eat away your wealth. The fact is, life is unpredictable. A car will break down, your heater will go out, you may lose your job, you may need a new roof. You just never know what will happen next. One thing is certain, life can be expensive. If you have gone through the effort of sacrificing and building wealth, do not blow it. Continue to save and maintain your financial cushion. The goal is not only to accumulate wealth, the goal is to maintain your wealth and enjoy financial freedom.

Grow Wealth By Investing

Saving alone will not bring you to financial independence. You must also invest, in other words, have your money work for you. Having your money work while you sleep is a sure fire way to maintain your financial position. It is important to note that the vehicles that you used to accumulate your wealth can also be used to maintain your riches. But typically, your investing strategy will be changed somewhat. You may not have the appetite to be as risky as you age over time or you may try to ensure that you have a better bet of maintaining rather than loosing it all in the financial markets. In other words, you may not be as aggressive with money in hand once you have achieve financial independence.

Once you accumulate your wealth, do not simply hide your money in the backyard or under the mattress. Do not allow inflation to erode your wealth, have your money continue to grow.

Keep Doing What You Are Doing

The same things that you have done in the accumulation phase is essentially the same things that you will need to do in an effort to maintain your accumulated wealth, but with some strategy changes where needed. Do not be satisfied with accumulating wealth. This is not the goal. Keep in mind that maintaining wealth and enjoying financial freedom until the end of your days on this planet is the goal. Build wealth and maintain it.

Conclusion

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

Follow me on Twitter @JoToFI_com

Follow me on Instagram @JoToFI_com

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.

Follow me on Twitter @JoToFI_com

Follow me on Instagram @JoToFI_com

Income and expenses

Understanding Income and Expenses

Money Maroon

On a basic level, financial independence requires an understanding of your income and expenses. Without a full understanding of what you are taking home and what you are spending, you will remain financially lost.

Asking The Questions

If you are thinking about financial independence, you have asked certain questions and have come to certain realizations. When did you realize that you may have to work the rest of your life? When did you realize that there are families who could relax and not lift a finger and their wealth would continue to grow? Upon the realization of the first thought, you will almost certainly think of the second.

Was it in school? Were you visiting a friend? Did you overhear a conversation? Were you on vacation? Was it after viewing a facebook picture? Was it following the purchase of a big-ticket item (home or vehicle)?  Were you checking your account balance, reviewing a bank statement, or looking at your paycheck? Were you paying a bill or a portion thereof? Was a purchase declined?

The Calculation

At one point or another, we all do the calculation. If my salary/yearly income after taxes is $X, and my expenses are $Y, $X-$Y = working forever.

At this point, one has a choice: (1) continue down the same path or (2) make a change. You are reading this because you want to/have made a change.

On a basic level, to change the above in your favor requires an increase in $X and/or a decrease in $Y. While this is a basic concept understood by all, the above is easier said than done.

Increasing Income

With regard to increasing $X, you may:

  • Save
  • Request a raise at work, 
  • Start your own business, 
  • Invest,
  • Begin one or more side hustles, 
  • Go back to school, or
  • Change jobs. 

Decreasing Expenses

With regard to decreasing $Y, you may:

  • Give up coffee and avocados (or whatever your daily morning pleasure may be),
  • Downsize your life (reduce the size of your home, or vehicle)
  • Bring your lunch to work, 
  • Cut back on purchases (shoe, clothing), 
  • Move closer to work, 
  • Change modes of transportation (buy a bicycle, take public transportation), 
  • Change living conditions (get a roommate, move in with mom), 
  • Paying down debt, or
  • Decrease the number of vacations/ stay at an air bnb rather than at a five star hotel.

Taking action to improve your financial situation is harder said than done, especially if your financials are impacted by your education level, children, health or student loans. The combination of any two of these will significantly impact your saving rate, and thus your retirement plans. However, the fact that you are thinking about your financial future means that you are ahead of the crowd. Continue on your journey to financial independence by understanding and tracking your income and expenses.

Conclusion

Financial independence requires an understanding of your income and expenses. Without a full understanding of what you are taking home and what you are spending, you will remain financially lost. We will tackle paths to financial independence here at JoToFI.com. Journey to early retirement and financial independence.

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Follow me on InstagramĀ @JoToFI_com

Video Summary

Financial Independence: Income and Expenses