“How do I get rich?” This is one of the most common questions we get from friends, family, and clients.
There is no set definition of ‘being rich’. There is not a one-size-fits-all solution. Everyone has a different situation and financial goal. Also, it is important to mention that becoming rich or building wealth takes time – it is not an overnight process. Well…unless you win the lottery. But let us be realistic. You likely are not winning the lottery. You could, but chances are you should be working on Plan B.
There are some common rules that most financially successful people follow that have helped them achieve their goals:
1. The first rule is quite simple. You must earn it. If you want money, you must work for it. For some, that means a second job. For others, it means you must get a job to pay for school to open the door for a higher paying job. We are in the middle of a pandemic, and we understand that it is easier said than done. But if you cannot land a job, you can always do side projects or provide a service for someone who is not able to do the task on their own. It might not be a long-term fix, but it is a good temporary fix. Where there is a will, there is a way.
2. The second rule is without a doubt much harder than the first. You must save and invest your money wisely. If you spend everything you earn, you will not get the opportunity to let your money work for you. The power of compounding interest is a marvelous thing that you may not be taking advantage of. To get to the second rule and the following rules, you must have rule one checked off.
3. For the third rule, you must control your spending. Yes, this is the cousin of saving. We can not tell you not to buy that fancy watch or that lottery scratch-off ticket. If you can afford something that you want, sure you can go buy it. But, do not spend money you do not have yet. Most people who are well off, try to get the most bang for their buck. That means to maximize the benefits of what you are purchasing while keeping the costs low.
4. If you have gotten to rule four, you are on the right track. What you must do now is to minimize your tax liabilities. The more you pay in taxes, the less you have to save and invest. The power of compounding interest works better when you have a large nest egg, to begin with. How can you minimize your taxes? Well, you should be taking advantage of tax-deferred investment accounts. You can do that through a retirement account through your employer such as a 401(k) or a 403(b). You also can use an IRA. There are some rules regarding these retirement vehicles, but more on that in another discussion.
5. The fifth rule is to surround yourself with like-minded people. If your current group of friends can’t wait until payday to go blow that paycheck at the bars, you may want to reevaluate who you spend your time with. Spending time with people who have good financial habits reduces the temptation to overspend and encourages the right financial habits. This goes for marriage, too. Finances are the number one cause of divorce, so ensure you and your spouse are on the same page. No one wants to go through a divorce, so have honest conversations and seek help from a financial planner or counselor if needed.
Remember this is not a sprint. This is a marathon; there is no rush. Set small goals, achieve those goals before moving on to the next bigger goal. It can be done, so remain positive, and take care of your health. It is hard to generate income when you are not able to work. We will leave you with this: “How do you eat an elephant?” … “One bite at a time.”
Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.
Everyone wants financial security. But women often face unique obstacles that can affect their ability to achieve it. Let’s look at some of these potential headwinds.
Women have longer life expectancies. Women, on average, live 5 years longer than men (1). A longer life expectancy presents several financial challenges for women:
Women generally earn less and have fewer savings. According to the Bureau of Labor Statistics (2), within most occupational categories, women who work full-time, year-round, earn only 81% (on average) of what men earn. This wage gap can significantly impact women’s overall savings, Social Security retirement benefits, and retirement savings.
The dilemma is that while women generally earn less than men, they need those dollars to last longer due to a longer life expectancy. With smaller financial cushions, women are more vulnerable to unexpected economic obstacles, such as a job loss, divorce, or single parenthood.
Women are more likely to be caregivers. Statistics show that the majority of caregivers are women (3). Of the more than 40 million Americans serving as caregivers to their loved ones, 60% are women and that number has increased during the global pandemic. Often times being a caregiver means having to work part-time or leave the workforce. Over time, being a caregiver can have significant financial implications, such as,
Women are more likely to be living on their own. Whether through choice, divorce, or the death of a spouse, more women are living on their own. This means they’ll need to take sole responsibility for protecting their income and making financial decisions.
Women need to protect their assets. As women continue to earn money, become the main breadwinners for their families, and run their own businesses, it’s vital that they take steps to protect their assets, both personal and business. Without an asset protection plan, a woman’s wealth is vulnerable to taxes, lawsuits, accidents, and other financial risks that are part of everyday life. But women may be too busy handling their day-to-day responsibilities to take the time to implement an appropriate plan.
Steps women can take
Today, women have more financial responsibility for themselves and their families. So it’s critical that women know how to save, invest, and plan for the future. Here are some things women can do:
It is important for women to educate themselves about finances, make financial decisions, seek professional help when needed, and implement plans to ensure that they and their families will have financially secure lives.
Sources
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021
Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.