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8 Financial Truths Every Wealth Builder Needs to Know

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Here at The Wealthy Idiots, we have 8 rules that we abide by. We call these our truths. This isn’t financial advice, but it is our own finely tuned algorithm (A.J. Sheff approves of IT term usage), that we use to maximize our financial prosperity. God, I love the word prosperity. Let’s get to it.

1. LEARN.

If you don’t read, absorb, and apply information, you will not succeed at this. Take in as much information as you can. By doing this, you will adapt to ever-changing financial environments, stay diverse in your investments, and likely, build long-term wealth for you and your loved ones.

2. CONTROL SPENDING.

Your daily, monthly, and even yearly spending can get out of reach quickly. Does your 2-day per week coffeehouse coffee turn into 7-days per week? Does your weekly date night turn into tri-weekly? These things can all impact your budget, and monitoring for this is key.

3. FOLLOW THE DOLLAR.

Do you know where your money goes? If you don’t, how can you expect to set, pursue, and crush quantifiable goals? Make a budget, track expenses, discretionary spending, etc., and then set goals that will push you to be better. I’m not saying you should stop drinking your pumpkin spiced latte from your favorite big-brand coffee bistro. I’m not saying you should skip hiring an electrician because you want to save $400. Just build a simple Excel sheet that tracks where your money goes (OR… you can use the one of our handy calculators here at The Wealthy Idiots once it goes live!)

4. BE TAX EFFICIENT.

This one is deeply personal to me. Every American should know how their taxes are calculated and understand the legal ways to lower tax liability. By not understanding the tax code, you are essentially giving Uncle Sam a 20-yard head start in a 40-yard dash. Why not level the playing field? The amount of money you can save over a lifetime is staggering. To add – don’t hire a “tax professional” and immediately think you are a step ahead. It’s very easy to become a tax preparer and most don’t possess any special knowledge that justifies the cost, nor makes them anymore likely to save you money. Just my $.02 on the matter. Note that this does not include CPAs.

5. DIVERSIFY.

Investment accounts, real estate, taxable-brokerage, pension, social security, single premium immediate annuity (SPIA), various side hustles, and the list goes on. Don’t limit yourself to one avenue of investment. Instead, try to invest in as many “buckets” as you can. Have you always been itching to start that side hustle (we were, that’s how The Wealthy Idiots was formed!), well, go do it! Does your uncle have a crazy investment scheme that only requires $100k down and $5,000 a month for the next…. nevermind, don’t do this one. You get the point.

6. SAVINGS RATE.

Whatever your desired outcome is, success or failure will likely hinge on savings rate. Don’t think saving 5% of your annual salary in a 401(k) will be enough to reach your yacht club retirement goal. Also don’t spend all of your free cash in your twenties and thirties while banking on social security to bail you out at 62. Set a goal, and set a savings rate that can realistically help you reach that goal.

7. DON’T COMPETE.

The Joneses aren’t real people. Okay, so they are. But the ones you want to emulate aren’t real. They are the ones on TV that drive Porsche’s, buy 231 inch TVs that must be dropped into their living room via crane, and have 5 different “monthly box subscription” services that all suck. Okay, they are real also, and we all know them!!! Do your own thing. Set your own goals. If that means traveling to the vineyards of Italy – by all means, do it! Set the goal, and plan a realistic path to make it happen (credit card rewards is one good suggestion that comes to mind with travel goals).

8. FIND NEW WAYS TO EARN.

This is the quickest way to ease the stress of numbers 1-7 on this list. Note that this may not always mean starting a “side hustle” or start working a part time job. Maybe, you found a new job opportunity that offers stock options, something you previously haven’t had. This will successfully add a new “bucket” of income and give you greater diversity. Maybe you have been playing the piano since age 4 and start giving lessons on the side. Perhaps you start blogging about financial matters and soon become the greatest personal finance site in the world (okay, humble brag and wishful thinking combined). You get the point – find a way to bring in more cabbage, or as Cuba Gooding Jr. says in the hit movie ‘Jerry Maguire’ “SHOW ME THE MONEY!!!”.

See, isn’t this easy? We got it, this is going to take time. But if you spend some time reading, paying attention to yourself, and intentionally planning your next financial steps, our 8 truths above will be an afterthought. Let’s get this thing started. Selected Element

Author

  • D.C. joined the Marine Corps right out of high school. When he left active duty after 5 years of service, he quickly earned a bachelors degree and an MBA. He got his first private sector job at a modest salary and quickly worked his way up through promotions. Once he started making decent money ($38k at the time), he quickly realized he needed to learn how to save for his future. After nearly ten years of research and application, he wants to share his knowledge and financial best practices so more people can become Wealthy Idiots!

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