2020 was very difficult but there were many gifts that came from this past year, too. As many of us may have faced financial hardships over the past year, we are faced with hard conversations, many involving money. We have learned we may need to be smarter with our money, both from a business and personal standpoint. Today I am going to discuss my wealth journey. I will chat about what I have learned, mistakes I have made, successes I have found as well as 5 common wealth building mistakes.
I start by discussing our wealth-building platform/foundation. In short, we committed to a plan for our future, both committing to a life of entrepreneurial goals, which started with extremely low income. We continued this for some time and slowly began to earn more money but we were still living incredibly frugally. There was also a level of uncertainty. So, as Eddie began his chiropractic business and began to see income from it, we chose to pay off any and all debt first. I wrote 12 checks dated for the first of each month for the entire year for $4,000 per month and gave them to Eddies mom for his student loans. In a little over 2 years we made the final payment on his student loan. Then we get to a point where that is paid off and said, “now what?” I needed to shift from surviving to thriving. I needed to shift my perspective and allow myself to start to enjoy the money. It is important to give yourself permission to go on a trip, to invest in yourself. You need to find the right balance. The next step as we started to see income rise was to focus on our Net Worth. Then I started tracking it and I saw how it grew and I noticed things that I did that took away from it. I started to see the bigger picture of what wealth is. We also started making giving a priority.
[14:45] The first wealth-building mistake is not reading about it. Wealth is something you can acquire as a skill and something you can learn. As I started reading about it, I learned there are so many different perspectives about wealth. If you are not reading about it you are not maximizing how you are building your wealth. Wealth is so much more than a skill set – you learn more about the emotional side of money and why you do what you do. The question becomes: “What shapes your money story?”
[16:55] The second wealth-building mistake is not knowing your Net Worth. It might be negative BUT, the cool thing is, if you know where you stand NOW, you can set a path of where you want to go. I have a fantastic Net Worth Calculator that you can download and calculate your net worth [Episode 47: Focusing on Your Net Worth]
[18:04] The third wealth-building mistake is something I am very passionate about: Expenses growing at a greater percentage compared to income. I share an example of someone receiving a raise at work. Let’s say they earn $500 more per month but then buy a car for $700 per month. Just because income grows, does not mean expenses have to. Tune into recent podcast episodes about pruning and expenses [Episode 10: The Pruning Challenge and Episode 30: Getting Real With Your Expenses]
[20:56] The fourth wealth-building mistake is surrounding yourself by the wrong people: accountant, financial advisor, insurance agent, friends, etc. Surrounding yourself with people that are going to help you in this wealth building journey is KEY. You are the average of the 5 people you spend time with and that includes wealth.
[23:10] The fifth wealth-building mistake is debt. Hammer out that credit card debt, vehicle debt, etc. Make sure you are aware of your debt. The best way to do this is to know your net worth
I have a BONUS! One thing we have always done that many do not is GIVING. Challenge yourself with giving. When you give at a high level (more than 10% of your income) you develop a different relationship with money. We set a giving goal the last two years and have hit it. We are very proud of that. Giving helps with the attachment to money.
We have been focusing on our wealth for over a decade now. I want you to consider these mistakes and see if any resonate with you. What are some areas of growth for 2021? Start engaging in conversation with your friends or with a financial advisor. Start reading some books! (Feel free to reach out for a few recommendations!) Avoid these mistakes and do something different. If you do what you’ve always done, you’re going to get what you’ve always gotten. Leave a legacy for your family. Impact communities. Live a life where there is no financial burden weighing you down. Part of pursuing you is pursuing your wealth too, even if your Net Worth is negative! Pursue your wealth building journey today!
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