Wealth

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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Adding Value

You Are Paid For Adding Value, Not Effort

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Who would not like to be paid more? No one, we would all like to be paid more for the tasks we perform. So how do we get paid more? For that matter, why are some employees let go during a slow down while others are retained? The answer is a simple one. While some talk the talk, very few walk the walk. While some add value, others act as if they do. Never forget, in any profession, you are being paid for adding value. Adding value in everything that you do is the key to true wealth generation.

Becoming Indispensable

Be Indispensable

In any profession, you are being paid for what you are bringing to the table. The more value you add, the more indispensable you become to an organization as an entrepreneur or an employee. This is a simple fact that so many forget or just simply do not recognize.

For any organization, while things are going well financially, it is very easy to hide inadequate, bland or sub par work. But once the financials become more difficult in view of market conditions, it becomes more difficult to hide the mediocre. In tough market conditions, the mediocre is likely removed or replaced. To stay at any company and be promoted, you must add value. 

Yes, favoritism can get you far, but actually being good at what you do and being an integral team member will always bring you farther. We all know that person who is indispensable, the person with the ideas, the glue that holds everyone together. Remember, for each position, if you are performing tasks that can easily be filled by someone else, you are dispensable.

Make yourself indispensable by finding ways to add value in whatever role you are currently in. You need not be in a top position, really any position will do. Even in the mail room. 

Effort vs value

Do not conflate effort and adding value. For many, when we say add value, they believe this is a matter of increasing effort. It is not. You can add more effort, but effort does not always translate into added value. Remember, “work smarter not harder.” Working harder does not necessarily result in added value. If you work harder but does not add value, what is the purpose? You will be tired and frustrated because your added effort will not be rewarded.

Adding value translates to anything that impacts the bottom line. Whether that is by implementing new programs to mitigate risks, an action or program that improves the pipeline, directly improving sales through literally selling more or by improving moral such that the team works better and more efficiently. Ask yourself, how do you impact the bottom line? Are others in your current role doing what you are doing? If they are, you have a problem. Find new ways to separate yourself from others and make yourself indispensable.

Adding Value And Doing What Is required

Adding Value

In anything you do, seek to add value. Of course, at a bear minimum, perform your job at a high level and do what is required. If you are not performing at a high level in fulfilling your job requirements, you are in effect not adding value. If you are fulfilling your role, do more. Outside of what is required, find ways to add to the bottom line. Do not be a passive member of your team, always show others that you are thinking outside the box.  Be assertive. This works whether you are working for yourself or employed by others.

When times get lean, if your are easily replaceable you will be replaced by someone that will accept a lower salary. On the other hand, if you are an indispensable asset that is continually adding value, you will be kept and continually promoted. Even if you are not kept and promoted, you will have options. You will be able to find another opportunity because your reputation as a person that adds value will preceded you.  As noted before, favoritism can get you far, but talent, capability and a knack for adding value will get you farther.

Conclusion

Who would not like to be paid more? No one, we would all like to be paid more for the tasks we perform. So how do we get paid more? For that matter, why are some employees let go during a slow down while others are retained? The answer is a simple one. While some talk the talk, very few walk the walk. While some add value, others act as if they do. Never forget, in any profession, you are being paid for adding value. Adding value in everything that you do is the key to true wealth generation. Journey to Financial independence by continually adding value to the world around you.

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Financial Mental Health

Financial Mental Health Is Important

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When we think about health, we typically think about our physical health. We think of muscle vs fat vs cardio. But within health, we must also address our mental health. We can replace a hip and a heart, but we cannot replace our brain (at least not yet). So we must take care of what is happening in our mental space, both consciously and unconsciously. Within our mental health, it is important not to forget that our financial situation affects our mental health. When addressing health, we must address our financial mental health. Without good financial mental health, you cannot have great overall health. Work on your overall health by getting your finances in order.

Your Financial Mental Health

You can work out all you want, and eat correctly too, but if you are stressed and having anxiety about paying your mortgage/rent or affording your next meal, you cannot achieve your best health. Let us face it, when it comes to health, mental health is typically an after thought. With  millions in debt and financial literacy at a low, financial health is even further removed from our consciousness.

Your Financial Mental Health
Your financial mental health is important

Improve Your Finances, Improve Your Mental Health

To improve your financial health, improve your financial security. This basically means that you should become more comfortable with your finances. Become more comfortable with your assets and your liabilities. In a simpler form, know the amount you owe and the amount of money you have. 

Next, to improve your financial security, increase your wealth beyond what it is today. This can be done by increasing your funds and/or decreasing your debts. By increasing your wealth, we mean increase your wealth to the point of being able to handle unexpected costs. Yes, building an emergency fund. This act of having a safety net has an indirected effect on your mental wellbeing. It is a stress relief knowing that you are able to handle unexpected costs. You need not worry about being homeless, hungry or the effect of a car breaking down. Having an emergency fund frees up your mental space to do other things that can further improve your life. 

Comfort Before Millions

While the goal for many is to be rich and have millions in the bank, you do not need millions to improve your financial mental health. Just building an emergency fund will substantially impact  your mental state. In a recent study, it was found that the ideal income point for individuals is about $95,000 for life satisfaction and about $60,000 – $75,000 for emotional well-being. You do not need millions to be happy.

Start Small

To improve your financial health, start small. By making small incremental financial changes, you are most likely to stick with the process and achieve your goals. Slow and steady wins the race.

To increase your wealth, begin small by saving a portion of your income. Start slow. Aim to save at least about 1% of your take home income. Slowly increase the total over time to the point where you can begin to confidently build an emergency fund. Take a similar approach with your debts, begin small. Begin by aiming to owe less next week than you do today (for example, credit card debt and student loans). This can be achieved by buying only what you need and consistently reduce your spending over time. Think about your wants and needs before each purchase. Also, consider using a budget and track your spending. These are the initial steps on a journey to a better financial mental state and financial independence.

Conclusion

When we think about health, we typically think about our physical health. We think of muscle vs fat vs cardio. But within health, we must also address our mental health. We can replace a hip, and a heart, but we cannot replace our brain (at least not yet). So we must take care of what is happening in our mental space, both consciously and unconsciously. Within our mental health, it is important not to forget that our financial situation affects our mental health. When addressing health, we must address our financial mental health. Without good financial mental health, you cannot have great overall health. Work on your overall health by getting your finances in order.

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How to become a millionaire

How To Become A Millionaire

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At one time or another, we have all asked ourselves this question, how to become a millionaire? It may seem impossible, but becoming a millionaire is not. As of December 2020, it was estimated that there are over 46 million millionaires in the world. In the United States alone, there are over 18 million millionaires. To achieve this status, you need to know the steps that will increase your likelihood of becoming a millionaire and consistently apply these steps overtime. 

How To Become A Millionaire?

Whether they realize it or not, every year many individuals take steps to become a millionaire. However, these same individuals also take many steps to prevent  or hinder achievement of this goal. If you are asking how to become a millionaire, consider saving, reducing debt, investing, earning more and repeat.

Save to become a millionaire

Save

On any financial journey, to achieve that goal, you must save. Saving is the basis of any financial plan. If you are wondering how to become a millionaire, generally, you must keep more than you spend. You must save!

Build A Habit

If you are able to save a lot, do so. But if you are struggling to save, start small. Start by saving $50 per pay check if you can. When you can save $75, do so. At first, saving is not about the amount that you save, it is about building a saving habit. Once you build a saving habit, you will be able to easily increase your saving rate. The task is to get use to seeing your money and not spending it.

The Benefits Of Saving

There are plenty of benefits to saving. Not only does saving provide the confidence of knowing that you can handle an unforeseen financial emergency, you can watch your money grow as well. It is a great feeling to see your money grow over time. Additionally, by saving, you are able to contribute to an emergency fund. With a fully funded emergency fund, not only will you have some money on the side, you will have 6 months to a year or more of expenses saved. This will not only serve as a financial back stop, but will also enable you to take advantage of financial opportunities when they arise. 

Take Advantage Of Opportunities

By having a strong savings account, you are able to invest at opportune times (for example when there is a massive sell off in the markets). With money saved, you are able to take advantage of interest rates at an opportune time. By saving, you are able to not only slowly grow your money, you may also be able to turbo charge your money by taking advantage of opportunities because you have the funds available to do so.

Your Buying Power

When saving, also appreciate the rate of inflation and the interest being paid on your savings. Inflation can eat away the buying power of your savings. With regard to interest rates paid, the average brick and mortar bank will provide a very minuscule interest on your savings. Online banks will provide significantly more interest, as such, you should strongly consider having an online saving account.

Pay off debts and become a millionaire

Reduce Debt

One of the fastest ways to lose money is through debt interest payments. By paying off your debts, you are automatically getting rid of this cost.

In some instances, debt financing can be beneficial. For example, if you are in real estate investing, the use of debt can be useful. But most types of debts can be disastrous to your financial health.

If your debts are those of consumer debt, for example credit cards, if you want to be a millionaire, you should pay these off. You should pay off your credit card balance each month. If you cannot pay off your credit card balance at the end of each month, do not use your credit card. Your credit cards are not free. If you do not pay off your credit card balance, you will continue to ask how to become a millionaire because the chances of getting there will continue to elude you. 

The simple fact is, having a credit card balance is expensive, very expensive. The average credit card Annual Percentage Rate (APR) is about 20%.  That is about 20% per year on your credit card balance. Worst than credit cards are typically company cards. Company cards, such as department store cards generally have higher interest rates than that of credit cards. Company cards at times charge 24% APR or more. That is a lot of money.

If you use credit cards, pay them off. Get the rewards, but do not allow your credit card company to charge you. PAY THEM OFF!

Invest to become a millionaire

Invest

Saving alone will not do the job if you are trying to become a millionaire. Saving is the basis of any financial plan, but you must also invest. This could be by investing in the stock market, retirement accounts or investing in yourself. Whatever the route you take, by putting money into a vehicle with the opportunity to get a return on investment that is a multiple of what you put in is one of the best ways to grow your wealth.

Investing does leave you open to losing at least a portion of whatever you invest. As such, ensure that you are comfortable with the possibility of losing at least apportion of your investment. The more risky the investment, typically, the higher the reward. If you are investing in the stock market, note that there are different asset classes that you can invest in, from highly risky to less risky.

When investing, ensure that you do your due diligence. Whether you are investing on your own or using a financial professional. Do your research. Ensure that your financial professional is on the level. We have all heard of Bernie Madoff and others like him. Protect yourself. As always, with any investment or financial opportunity, if it sounds too good to be true, it probably is.

You may also invest in yourself. This may be in the form of your education, financial development or health. Your return on investment may not immediately be financial, but over time it will. Investing in your education may lead to a better job with a higher salary range. By investing in your financial development, you may be able to find ways to keep more of your money. Investing in your health will allow you to keep going, keep learning, less aches and pain, potentially a longer and more rich life.

Earn more and become a millionaire

Earn More

How to become a millionaire? Earn more. This sounds simple and straight forward, but it is not always the case. If you want to become a millionaire, constantly strive to earn more. Whether you are earning more through a promotion at your place of employment or by obtaining a new job, earn more. If you continue to earn more, you will be able to save more, pay off more debt and invest more. By earning more, you significantly increase your chances of achieving your financial goals earlier.

Do not limit yourself to earning more through an employer, you can build one or more side hustles or you can also become an entrepreneur. Be creative in how you earn.

It is important to note that by saving more, you can earn more through interest payments. By investing, you can earn more through a return on investment. The steps of how to become a millionaire are additive and works together to achieve your financial goals.

Repeat

Once you begin to save, pay off debts, invest and earn more, rinse and repeat. You must consistently repeat these actions to achieve your ultimate goal. If not, you may increase your wealth but may not achieve your goal. 

For example, by earning more, you may fall into the trap of lifestyle creep and spend more. The net result may not necessarily be a growth in wealth. However, by earning more, saving more, using the money to pay down debts or invest, the net result is likely to be an increase in wealth.

Conclusion

At one time or another, we have all asked ourselves this question, how to become a millionaire? It may seem impossible, but becoming a millionaire is not. As of December 2020, it was estimated that there are over 46 million millionaires in the world. In the United States alone, there are over 18 million millionaires. To achieve this status, you need to know the steps that will increase your likelihood of becoming a millionaire and consistently apply these steps overtime. Not surprisingly, the steps to become a millionaire are similar to those for achieving financial  independence. 

There are also other ways to become a millionaire, but some are less likely to occur. You may win the lottery or an inheritance from your rich uncle. While possible, these are long shots. Most millionaires became millionaires by saving, reducing debt, investing, earning more and repeating these foundational acts.

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529 Plan

529 Plan: Contribute Today For Your Child’s Tomorrow

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It is important to secure your financial future first, before turning to your children’s. However, once you turn to the financial future of your children, a 529 plan should be on the top of the list. 529 plans allows account holders to put away funds for a beneficiary, typically a child or other loved one.

529 Plan
529 plan, a plan for your child’s future

Overview: 529 Plan

529 plans are authorized by Section 529 of the Internal Revenue Code and were designed to encourage saving for future education costs. When first instituted, 529 plans were limited to covering the costs of post-secondary education. Overtime, qualified education costs covered by 529 plans were expanded to also cover K-12 education in 2017 and apprenticeship programs in 2019. In view of the rising costs of education, if you have children, a 529 plan should be apart of your financial tool kit.

Types Of 529 Plans

Generally speaking, there are two types of 529 plans. A prepaid tuition plan or an education savings plan. According to the SEC, most all States and the District of Columbia sponsor at least one of the two types of 529 plans. Additionally, some private colleges and university may also have similar plans. Note that Wyoming is the only State that does not offer its own 529 plan.

Prepaid Plan

The prepaid 529 plan allows account holders to purchase units or credits at participating colleges and universities (usually public and in-state) for future tuition and mandatory fees at current prices. As such, you are locking in today’s prices. This can be a significant benefit in view of costs savings when taking into consideration the consistent rise in education costs over time.

Savings Plan

529 savings plan allow an account holder to open an investment account to save for the beneficiary’s future. The saved amount can then be used to pay for qualified expenses. Such qualified expenses include tuition; room and board; mandatory fees; and, books, and computers.

With regard to the investment account, in ways similar to a brokerage account, the account holder can chose from a range of investment options (target date funds, ETFs, Mutual funds) that is offered by the respective State or vender used by the State to carry out the 529 program. As such, prior to selecting a fund to invest in, it is important to carefully review the options available and the associated fees.

Taxes

529 plans are often referred to as a tax advantage account because of the associated federal and State tax advantages.

Contributions

Many States offer tax benefits for contributions to a 529 plan. These tax benefits typically include a State income tax deduction up to a certain limit contributed. Usually, these tax benefits are limited to residents of that State. For example, if you are a resident of Maryland and have a Maryland 529 plan, you would be able to deduct a certain amount of your Maryland 529 contributions from your Maryland State income tax. On the other hand, if you are not a resident of Maryland, and have a Maryland 529 plan, you would not be able to deduct your contribution from your home State’s income tax. 

Unfortunately, unlike the State tax deduction, on a federal level, the money you contribute to a 529 plan is not tax-deductible for federal income tax purposes.

Withdrawal

With regard to withdrawals for qualified expenses, 529 earnings are not subject to federal income tax and, in many cases, State income tax. However, if 529 account withdrawals are not used for qualified expenses, the funds will be subject to both State and federal income taxes and an additional 10% federal tax penalty on earnings.

Growth

Another benefit of 529 plans is the tax-free earnings that grow over a period of time. Growth of funds in your 529 account are not taxed. Therefore, the longer your money is invested in a savings plan, the more time it has to grow and the greater the tax benefit. The upshot here is a simple one. Although contributions are not deductible from your federal income tax, earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for qualified expenses. 

Conclusion

It is important to secure your financial future first, before turning to your children. However, once you turn to the financial future of your children, a 529 plan should be on the top of the list. 529 plans allows account holders to put away funds for a beneficiary, typically a child or other loved one. A 529 plan is an easy way to get your child off on the journey to financial independence.

For your convenience, we have provided a chart below with links to the related State 529 plan. Continue on your journey to financial independence. 

States of the United States of America
and Washington, D.C. 529 Plans		Abbreviation
AlabamaAL
AlaskaAK
 ArizonaAZ
 ArkansasAR
CaliforniaCA
 ColoradoCO
 ConnecticutCT
 DelawareDE
FloridaFL
GeorgiaGA
 HawaiiHI
 IdahoID
 IllinoisIL
IndianaIN
IowaIA
 KansasKS
KentuckyKY
 LouisianaLA
MaineME
 MarylandMD
 MassachusettsMA
MichiganMI
 MinnesotaMN
Flag of Mississippi ("New Magnolia Flag").svg MississippiMS
 MissouriMO
MontanaMT
 NebraskaNE
 NevadaNV
 New HampshireNH
 New JerseyNJ
 New MexicoNM
 New YorkNY
 North CarolinaNC
 North DakotaND
 OhioOH
 OklahomaOK
 OregonOR
 PennsylvaniaPA
  Rhode IslandRI
 South CarolinaSC
 South DakotaSD
 TennesseeTN
 TexasTX
 UtahUT
 VermontVT
 VirginiaVA
WashingtonWA
 Washington, D.C. (District of Columbia)DC
 West VirginiaWV
 WisconsinWI
 WyomingWY

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Rags to riches

Write Your Rags to Riches Story Now!

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We have all heard a rags to riches story. It is now time to have your own story. While we all day dream of winning the lottery, or inheriting riches, most rags to riches stories are not a result of a quick transfer of wealth. The fact is, most rags to riches stories are a result of making difficult, wise and consistent financial decisions over time. 

The Money Game

No matter how much or how little money you may have today, to build sustained wealth, you must spend less than you earn. This is the only way that you will save. Saving is important because it allows you to build up an emergency fund, it allows you to become prepared for the unpredictable. An emergency fund makes financial emergencies routine life events.

Further, by saving, you are able to have money/funds/assets available such that you are able to take advantage of financial opportunities. 

For example, if the stock market falls, do you have enough money in reservers to ride out the downturn? Are you able to buy stocks at the bottom of the market? In such a situation (financial down turn), many do not have enough in reserves to ride out a market downturn and therefore sell at the bottom of the market and realize financial losses.

If home prices fall, are you able to take advantage by purchasing real estate? When interest rates are low, are you well positioned to borrow at the lower interest rates?

Saving, and having money/funds/assets to take advantage of financial opportunities is necessary to write your own rags to riches story.

Invest In Yourself And Journey From Rags To Riches

With your savings, not only are you prepared to take advantage of financial opportunities, you are also able to invest. You may invest in any vehicle that brings value, for example real estate, the stock market, and yourself. Saving alone will not allow you to complete your rags to riches story, you will need to invest such that your money/assets make money on their own. You will need to invest such that your money works for you instead of you working for money.

On a basic level, any investment that you make after doing your due diligence is an investment in yourself. However, making an active and purposeful decision to invest in your education is a must. Your investment may be in education to increase your knowledge in your field of study/profession or in financial literacy. 

As your money/assets grow, so must your financial knowledge.  If not, you risk regressing and losing what you have worked for. Do not forget, there are equally many riches to rags stories as there are rags to riches stories. You must purposefully manage your money/assets and understand how money works to maintain and grow your wealth. Your financial literacy is important.

The Element Of Luck In Your Rags To Riches Story

Luck is essential but hardly recognized
Luck is essential, but hardly recognized

Luck is essential, but one of the least recognized component of a rags to riches story. Let’s face it, many hate to admit that luck played a role in getting from rags to riches. Most want to attribute all their riches to their own hard work and dedication. This is false. Many toil their entire lives and remain in poverty. While hard work plays a role, luck and the people around you also contribute to your success.

Luck is a matter of being in the right place at the right time. Luck is the convergence of resources and opportunity. What you will notice as a constant theme throughout life is that the harder and smarter you work, the luckier you will be. The harder and smarter you work, the more opportunities will be open to you; the luckier you will be; the more you will find that you are in the right place at the most opportune time. 

Luck requires preparation. You must be ready when the opportunity presents itself, otherwise, your luck will turn into a life changing missed opportunity.

Write your own rags to riches story by playing the money game, investing in yourself and being ready to act when an opportunity presents itself.

Conclusion

We have all heard a rags to riches story. It is now time to have your own story. While we all day dream about winning the lottery, or inheriting riches, most rags to riches stories are not a result of a quick transfer of wealth. The fact is, most rags to riches stories are a result of making difficult, wise and consistent financial decisions over time. Journey to financial independence and write your own rags to riches story.

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Video Summary

Write your rags to riches story!
Top Secret

Secret To Building Wealth

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Every one wants the secret to building wealth. Many pay for courses or are drawn into get rich quick schemes. But the secret to building wealth is simple. It is the same it has been from the beginning of time. The secret to building wealth is money (assets) and time. That is it. If you do not believe me, continue reading the below.

Building Wealth – Money

Money and as a broader concept, having assets or things of value is the basis of wealth generation. This is no surprise. The old adage of you need money to make money is true. It comes down to simple math. If you begin with a basis of $100 and gain a return of 10%, your return plus your basis is $110. On the other hand, if you have a basis of $1,000,000 and gain a return of 10%, your return plus your basis is $1,100,000. Money matters. Having assets to trade matters.

If you were born wealthy, you have obtained a head start. If you were born poor, you will need to obtain money or valuable assets that are tradable. In some cases, this means having or developing valuable skills that one may trade to obtain money. In other words, employment. 

The above does not mean that those born wealthy will remain wealthy. Having money simply gives you a head start, but what you do with the money you have is important. If you place your money under a bed or receive a low return on your money, inflation will erode the value of your money. On the other hand, if you make smart moves with your money, its value will increase. Rich or poor, if you do not know how to grow and build wealth, you will lose what you have. The more money/assets you have, the faster it could grow over time.

Building Wealth – Time

The secret to building wealth not only includes a need for money, you also need time. Simply put, to build any thing takes time. Wherever you begin on the scale between poverty and wealthy, to build wealth or more wealth will take time. To build wealth, you must invest, you must put your money to work over time. As noted above, if you park your money into a savings account or under your bed, the value of your money is likely to be eroded by inflation.

Once you put your money to work, there will be a time period before you are able to obtain a return on your investment. This time period could range from as little as a few seconds to multiple decades. Whether you put your money to work by investing in yourself in a specific field for example obtaining an education or learning new skills to obtain gainful employment, investing in the stock market, investing in a startup business or investing in real estate, the payout or return on investment takes time. The more time you have, the more your investments may potentially pay off. Consider over the life of your career, the more time you have the more money you will earn, the more you can invest to grow wealth. The more time you have, the more homes you can flip if you are in real estate investing, the more return  you can gain from the stock market, the more startups you can invest in. As such, the earlier you are able to obtain money or tradable assets and begin putting your money to work, the more wealth you can generate.

Examples

As an example of the above, take a look at your favorite wealthy person. Is it a doctor, lawyer, investor or entrepreneur. What do they all have in common? They had money or tradable assets that they  exchanged for things of value that grew over time. In some instances, skills are being traded for a high salary. From the salary, money is saved and invested over time to generate wealth. For others, they had innovative ideas that they initially funded and overtime those ideas grew into ultra profitable companies.

Caution 

As noted before, having money does not mean wealth. Because you now know the secret to building wealth, this does not mean that you will automatically become wealthy. Once you obtain money, how you use this money over time is very important. You may invest in your education in a field that does not pay well or that is no longer needed, which would leave you in debt and struggling. It is possible that you may invest in companies that are not innovative and may later go bankrupt. You may also invest in the wrong stocks or industries. Building wealth takes time and money, but building wealth is not automatic. You must do your due diligence and in some cases be lucky.

Conclusion

Every one wants the secret to building wealth. Many pay for courses or are drawn into get rich quick schemes. But the secret to building wealth is simple. It is the same it has been from the begining of time. The secret to building wealth is money (assets) and time. That is it. Now that you know the secret to building wealth, take steps today to journey to financial independence.

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Video Summary

Fire Movement

Fire Movement: What Is F.I.R.E?

Money Maroon

What is F.I.R.E? Financial Independence Retire Early (F.I.R.E) is a movement (Fire Movement) that is dedicated to saving and investing over time to achieve financial independence such that you can retire. The goal of the Fire Movement is financial independence, but also the ability to retire far earlier than typical. What is F.I.R.E? It is not a millennial fad. It is not only for those having a high income and no children. Financial Independence Retire Early is for everyone who wants to achieve financial independence.

Fire Movement – F.I.R.E Is Not A Millennial Fad

While F.I.R.E itself is generally new to the lexicon, the concept is not. For hundreds of years, many have saved, invested, and have experience financial freedom such they can do what they desire. Let us think about it, is this not a version of what you tell your kids, and for that matter, what your parents told you? Save, such that you can have more for a rainy day. In the case of F.I.R.E, that rainy day is early retirement.

The earliest version of the modern Financial Independence Retire Early approach is said to be borne out of the 1992 best-selling book “Your Money or Your Life” by Vicki Robin and Joe Dominguez. This concept has further evolved into what we see today. Today’s movement applies the tools currently available.  For example, many achieve financial independence via use of online savings accounts which have higher interest rates, the use of Roth IRAs and traditional IRAs, maxing out 401K or related accounts, investing in low cost index funds, paying down credit card debt, and developing a side hustle in the gig economy. 

Fire Movement – F.I.R.E Is For Everyone No Matter The Income Level

F.I.R.E is not just for those with high incomes. Don’t get me wrong, I do understand that some with high incomes may have an easier time saving and investing. However, that may not be a logical reality. As noted previously, higher incomes may at times result in high debt.

It is not atypical for high earners to live pay check to pay check. Simply put, those nice cars carry a nice car payment and a nice cost for insurance coverage. Those nice homes comes with a nice mortgage and nice costs of up keep (insurance, heating, cooling, landscaping, house keeping). Further, high incomes typically comes following longer educational requirements, longer educational requirements comes with high student loans.

The simple fact is, no matter if you are taking home a high income, low income or something in between, F.I.R.E is for you. No matter the income level, achieving financial independence will take discipline and sacrifice. While popular stories show the extreme (those having a six figure incomes who are able to save greater than 70% of their incomes over a number of years or those who live in their cars in the middle of nowhere such that they are able to save 90% of their income), there are also many others who make less than six figures, have children and were able to achieved financial independence.  No matter who you are, live below your means, save, invest and you can achieve financial independence.

Retire Early

The “Retire Early” portion of F.I.R.E is typically triggered once savings/investments reach approximately 30 times yearly expenses (F.I.R.E Number). The aim is to have savings/investments such that they are able to cover living expenses by withdrawing 3% to 4% of saving/investments yearly. The total savings/investments needed to achieve financial independence is dependent on your lifestyle and the lifestyle you want to have going forward. There are different categories of F.I.R.E.  For example, there are (1) Fat, (2) Lean , (3) Barista, and (4) Coast.

  • Fat F.I.R.E: Living and planing to retire with a traditional to above average lifestyle. Fat generally requires having a higher F.I.R.E number. With fat F.I.R.E, you are more prepared for most unforeseen financial bumps in retirement.
  • Lean F.I.R.E: Living and planning to retire with a more minimalist lifestyle. Lean F.I.R.E generally requires extreme minimalist living and extreme savings. Thus, a lower F.I.R.E number. With lean F.I.R.E, you may be more sensitive to unforeseen final bumps during retirement
  • Barista F.I.R.E: Those on the journey to financial independence who have quit their traditional employment but still do some part-time work to cover current expenses that would otherwise erode their savings/investments.
    • Withdrawing money from your savings/investments, but supplementing it with income
  • Coast F.I.R.E: Those who have enough in their savings/investments and are doing some part time/full-time work to pay for their living expenses.
    • Keeping employment to cover living expenses and not withdrawing from your savings/investments

Which of the above fits what you and your family are trying to achieve?

Critics

The general angst of F.I.R.E is Retire Early (R.E). Many who are critical of the Fire Movement focuses in on the early retirement component. What happens if you hit a financial bump following retirement? Note that many who are committed to early retirement have no intention of retiring at 35, 40 or 45 years of age to sit at home. F.I.R.E enthusiasts typically have no desire to retire and do nothing. F.I.R.E enthusiasts generally do not desire to stop contributing to society. 

To F.I.R.E enthusiasts, Retire Early generally means you can retire, if you want to. Retire Early means you can leave a terrible career and do what you want, whether that is starting your own business, volunteering, or spending more time with your family. Retire Early means doing what makes you happy, pursing your passion. As a reality check, if someone is discipline enough to save, invest and achieve early retirement, do you think that individual will sit at home and twiddle their thumbs once financial independence is achieve? The answer is a resounding no.

Further, there are countless benefits to starting the journey to financial independence or achieving financial independence. Having money in the bank lowers financial stress, allows you to take advantage of opportunities and improves confidence. The confidence to take active steps in life to better yourself and financial position. These benefits will affect all aspects of your life, including your personal relationships and your mental health. 

F.I.R.E Financial Independence and freedom
F.I.R.E means freedom

Conclusion

What is F.I.R.E? Financial Independence Retire Early (F.I.R.E) is a movement (Fire Movement) that is dedicated to saving and investing over time to achieve financial independence such that you can retire. The goal of the Fire Movement is financial independence, but also the ability to retire far earlier than typical. What is F.I.R.E? It is not a millennial fad. It is not only for those having a high income and no children. Financial Independence Retire Early is for everyone who wants to achieve financial independence.

Follow me on Twitter @JoToFI_com

Follow me on Instagram @JoToFI_com

Video Summary

What Is F.I.R.E?