IF YOU WANT TO BE RICH, YOU CAN'T SKIP THE PART WHERE YOU SAVE
“It’s pretty easy to get well-to-do slowly. But it’s not easy to get rich quick.” — Warren Buffett
All of my perceived “rich” clients have one very important thing in common, they are diligent savers. One of the worst kept secrets in the financial advice industry is that if you spend a little bit less than you make, you usually come out ahead. To build wealth, you need to save up! It seems so simple, but sometimes it is difficult to put a plan in place to get there. There will always be a power struggle between saving for the future versus enjoying the fruits of your labor in the moment, it is not always easy to clearly see why you are saving for the future. One of the biggest advantages in working with a trusted financial adviser is coming up with a solid plan. It gives you a roadmap, goals to strive for in building your ideal future, a “why” you are saving for the future. Something concrete that gives you confidence in what you are building for your family.
Another secret that I am sure many of you know, life doesn’t always go exactly as planned! In life there are plenty of things you cannot fully control (your family’s health, the stock market, a major expense with your home), and many spend too much time worrying about things completely out of their hands. The best savers focus and keep a handle on (or allow someone they trust to keep a handle on) the variables that are within their power. That could include: the amount they save, the amount of risk they take, and having financial flexibility when needed. Having financial flexibility is extremely important when building wealth. Because life doesn’t always go as planned, having a financial reserve, or the ability to access funding when needed, allows you to avoid taking on bad debt or a financial setback at an inopportune time. This will ensure that you won’t need to deviate from the financial goals you’ve set out to accomplish.
So, what needs to be done to ensure you are doing your part to be Rich:
Take advantage of having time on your side, start saving early!
Even if you start small, instilling good saving habits early will pay off dramatically in the future
Over time, as your income increases, begin saving a larger percentage of your income
If your compensation is variable, save more during times of peak earnings, giving you more flexibility in times where business is slower
Have access to funds (either an emergency fund, or liquid investments) that allow you to cover any short-term major expenses without sacrificing your long-term plans
Always have a plan to get where you want to be in the future
Continually monitor that plan with your Financial Advisor to make sure you are still headed in the right direction
“On average, millionaires invest 20% of their household income each year. Their wealth isn’t measured by the amount they make each year, but by how they’ve saved and invested over time.” — Ramit Sethi
Billy Cardwell, CFP®
Billy Cardwell is the Owner and President of Aurora Financial Strategies, a financial advisory firm based out of Kokomo, IN. He can be reached via email at billy@billycardwell.com. Investment Advisory Services are offered through BCGM Wealth Management, LLC, a SEC registered investment adviser. This blog does not constitute advice. This is not an offer to buy or sell securities. Advisor is not licensed in all states.
