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It's Simple Spend Less Than You Earn

It's Simple Spend Less Than You Earn

July 26, 2022

From our CEO and Financial Advisor Kathy Williams - A Financial Tip for the End of July

When you Get Paid Spend Less Than You Earn.
I know, it sounds very simple, but so many people struggle with this. I mean I did in the beginning of my career. You have to change your mindset from scarcity thinking to abundance living!

As a poor kid from the ghetto of Philadelphia and the oldest of 8 children, after college I was making more money I had seen in my life. I had the opportunity to get material things I had never had before. I went crazy and bought everything. When I didn't have enough money left, I used credit. Guess what? Pretty soon, I felt like that same kid from the ghetto, living in a state of scarcity again. Living without, and not having enough. I didn't like it. I told myself, something had to give.

I was providing investment advice about how to get wealthier. I would look around at the client's environment they lived in. By all means it wasn't the ghetto, but modest. It wasn't full of material stuff either. But they had money. Some of them had lots of money. They kept their cars for a long-time and they didn't finance vehicles. They bought used cars in cash. They went to nearly new shops to buy gently used clothing for themselves and their children along with some new clothes. They vacationed every year and didn't have debt. They had significant cash flow and they lived according to a budget. The biggest thing was - they saved lots of money! I told myself, this is what I have to do. No one ever discussed this with me with I was a child.

Although I was providing investment recommendations to clients on how to invest in various investment products and build wealth. They taught me valuable lessons too without saying a word to me. All of these people building significant wealth were doing the same thing, living below what they earned. These are the lessons I learned from them:

- Lesson#1: It's not the amount of money you make that matters, it's what you do with it that matters the most.
- Lesson#2: No matter how much or how little you're paid, you'll never get ahead if you spend more than you earn.
- Lesson#3: Stay away from credit cards. They keep you in a state of bondage and scarcity. You will never build significant wealth owing credit card debt or car loan debt.
-Lesson#4: Save and invest, save and invest.
-Lesson$5: Do not care about what the Jones are doing.

Sometimes it's easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in savings. It doesn't always have to involve making big sacrifices.

Whatever your employer is matching in your retirement plan - make sure you invest up to that employer match when you are starting out and increase 1% every year until you reach the maximum. After that fund a Roth IRA for your tax-free account. Once you have done all of this, save for annual vacations your new car fund/short-term goals, educational funding. Once all of this is established - you are doing a good job. Enjoy your life!

Need help figuring it all out and getting a nudge of motivation to stay on target - we can help. Schedule here for a consultation: