For decades the #1 reason behind the wealth gap has been the lack of financial literacy. Research shows that the middle class has a grim future ahead of them given the fact that they don’t own anything. The lack of teachings on financial literacy from the school system is to blame of course. Nevertheless, complaining about it won’t do much for you nor us. Instead, we choose to step in and provide value to you by mentioning a few important points about financial literacy and bad money habits. You will be able to put them into practice today to help you save more to invest more so that one day you can become part of the top 1%.
Track your Expenses and Budget
It is a shame that most people do not do this. By simply doing this you are ahead of 99% of people. Because 99% of people do not do it! Except for the top 1%. Doing this can mean thousands of dollars at the end of the year that you can invest! Do your due diligence on how to do this appropriately, the internet is out there for us, information is available at the palm of our hand (“Cellphone”). Nonetheless, if you are having trouble doing this, our firm can help you. We can provide you the professional expense and budget tracking for you and your businesses.
Employer Retirement Matching
Research shows that only about 33% of Americans contribute to their 401(K) plans. We recognize that there are plenty of investment retirement vehicles but we see often that people do not take full advantage of their employer’s 401(K) plan. This is an amazing opportunity to miss out on. As the subtitle suggests, your employer most likely than not matches any contribution you make to your 401(K). This means that if you contribute $1,000 to your plan, your employer will match it by also contributing to your plan another $1,000. This is free money. We invite you to discuss with your employer their 401(K) plans to then take full advantage of it if you haven’t done so. If you are self-employed, you can opt for another investment vehicle that is called SEP 401(K).
Transportation
Research shows that the average American spends about $568 on a monthly car payment. On top of this, there are insurance and maintenance expenses. This is a lot. Just by not opting for a cheaper reliable car you would be missing out on big bucks that could well be invested. With the power of compound interest this can mean thousands of dollars not just available to you, but working hard for you. This is an example of a bad money managing habit that most people do. To become part of the 1% you must act like it if one day you are to achieve this of course. We invite you to stop trying to look pretty to those people around you so that you can look pretty when you walk into the bank.
Debt
Most people get into unnecessary debt rather than the type of debt that will give them more purchasing power. We do not mean to avoid debt entirely. The top 1% makes more money with debt. The good news is that just like for the top 1%, debt can be a phenomenal resource to you as well. If you are to close in the gap between you and the top 1%, use debt as they do. The top 1% uses debt to get more money. They only get into debt for things that will give them more cash flow. Instead of financing a brand-new car that will give nothing in return, they finance a rental property that will, every single month from rental payments. This is possible since rental payments should at the very least cover the mortgage payments. This is one of many results from being financially literate.
If you feel like you need help with any of the aforementioned fundamental money managing habits no need to worry. Our firm is more than happy to help you regarding any of these points. Schedule a call with us today to help you think and act in the right direction.
“All in all, having money is not happiness but a tool that if used wisely it can serve as a stepping stone for happiness.”