So, you’re thirty. You’re not a kid anymore, you know how to act responsibly and your life is getting a lot more complicated. Getting married, having kids, moving up in your career, buying a home, all these things are in transition and it can be overwhelming. Don’t let the chaos of your life turn into chaos for your bank account. Here are 5 pieces of advice that will help grow real wealth.
- Live Well Below Your Means: Yes, you’ve heard the advice ‘live below your means’, but if you’re bringing in $4,000 a month and spending $3,990 of it, you’re not ‘being wealthy’ you’re ‘doing okay’. And you know what, that’s fine! But, the bigger gap you can make between what you earn and what you spend means the faster you can reach that financial goal. This leads into…
- Focus on The Percent of Income That You Put Away, Not the Amount – So let’s say your household brings in that $4,000 a month and you’re putting away $750; that’s a good chunk of what you earn. Then someone gets a promotion and you’re still putting away that $750 and you spend the extra. This is called lifestyle inflation and it will kill your financial success faster than anything else. In the end, it’s not about the dollar amount, it’s about the percentage. This way you’re saving more because you’re earning more.
- Be Proactive About Your Money, Not Reactive – You’ve probably already hit the point where you had to give yourself a little financial reality check. Did you learn from that experience long term? You shouldn’t take for granted how much money you have in the bank. Spend time looking over your expenses and see where your spending is leading you; if it’s a bad route, it’s time to course correct. Make sure you do this every month. It’s easier to keep up than catch up.
- Don’t Spend More Money, Spend Money on What You Value – People think that the more money they have coming in the more that you can spend. This is technically true, but it’s the wrong way to look at it. Spending money on things that provide you with fulfillment and happiness are far more important. Your friend may have just taken a 10-day cruise of the Caribbean and you think that now you can afford that as well. You may be right, but what works for them may not work for you. If you’re spending money like everyone else just for the sake of it, you’re missing the point. Spend it on what you value.
- Don’t Complicate the Way to Financial Success – At the end of the day, the best advice is keep it simple. There’s an entire industry out there that makes financial success sound difficult and complex, however all it takes is a little discipline and some small, simple actions. It’s like losing weight, you won’t see immediate results but keep going and over time you’ll reach your goals. Consistency is the key.