Creating Wealth is a decades long affair. Rarely happens overnight and a quick success can backfire.
A few people win lotto. Instant riches. But a few years later you find former winners in bankruptcy court. They did not know how to keep or invest money. Only how to spend it.
Basics Matter
Spend less than you bring home.
Save for gifts, vacations, unexpected repairs and layoffs.
Pay off credit cards every month. Losing 18+% interest hurts.
Sign up for your 401K and take the company match minimum. Saving tax deferred your taxes go down more than take home pay.
Have insurance - auto, medical, long term care, renters or homeowners, plus a personal liability policy. Not having insurance can bankrupt you.
Attitude
Fear of Missing Out cause people to pay too much, buy luxuries or take expensive vacations. No one needs a $50,000 wedding. The debt incurred will hurt your relationship.
Diversify your investments. Nobody knows what stocks or bonds will do next. Everyone makes mistakes and have setbacks. Recessions and recoveries happen. Use ETFs - roughly 35% stocks, 55% bonds and 10% precious metals & REITs.
Drive an uncool car. Cars lose so much value so quickly. Prefer 3-6 year old cars and paying cash. My investment advisor has only owned 4 Toyotas.
Investigate and talk with experienced people before buying. FOMO leads to over paying. Good investors don’t rush decisions, nor join in speculative manias. Bubbles burst and values return to earth quickly.
Real estate is not liquid. If you need to move selling costs are nearly 10%. Don’t buy too big of a home. Make sure the location fits your future plans, then check property is in good condition.
Time
First few years little accumulates in 401K or savings. After ~5 years the returns and dividends start adding up, plus debts are getting paid off. You can see where you are going.
Your mortgage use to be higher than rents. Ten years later less than renting a 2 bedroom apartment. Plus appreciation puts you are ahead.
Learn about subjects one at a time. No one knows everything. Admit you need to know more and ask what seem like foolish questions. If a salesperson is rushing your decision, sleep on it overnight and talk with advisors before buying.
Wealth and savings are desirable because they give you options. Paying for education, buying a home, or investing in a business or real estate. Your future self will be grateful for early sacrifices.
“These are my principles, and if you don’t like them … well, I’ve got others.” - Groucho Marx
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