Building Your Wealth...Plus Acorns For Investing
I’m going to step away from the markets this week and focus on the concept of building wealth. This is an area we can all improve upon, including me. Sometimes there is a misconception that “wealth” means riches. It doesn’t. Your wealth is merely the value of your assets, whether you have $2,000 or $10,000,000.
In this week’s Tobin Report, I will discuss some important concepts to help you grow your wealth, wherever your starting point may be.
Most of us started working at a young age trading our time for money so that we may buy the things we both need and want in life. Ultimately, the goal is to earn more than we need, save the difference, and invest the savings so that we no longer NEED to exchange our time for money.
It is my belief that time is our most precious asset. And yet, ironically, life requires us to give up this precious asset for money. However, with proper planning, and by choosing to use the money we earn wisely, you can actually give yourself more time later in life when you appreciate it the most.
“My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time.” -- Steve Jobs
The Path
So how do we get better at building wealth?
It starts by understanding the path, which is actually quite simple. I didn’t say easy; I said simple. There’s a difference. It’s like losing weight. Most people understand the path to losing weight…which, also, is quite simple!
Eat less. Eat healthy. Workout more. Boom! (I hate when people say boom)
However, many people choose not to follow this path because it’s too difficult. The same is true for building wealth.
Earn money. Save money. Invest and grow your money.
Sounds simple. The difficulty lies in executing each step and knowing where to invest.
Not to worry. We’ll get there. I’ll cover the various investment vehicles in another newsletter, but let’s start with the first steps toward accumulating…
Pay Yourself First
The most critical step to building wealth is to pay yourself first. I know you’ve heard this before but this is really where it starts. This means when you get paid, the first dollar should go to your future self, not the server at TGIFriday’s (do people still eat there??), not the cashier at Nordstrom’s, and definitely not the salesperson in Vegas selling Louis Vuitton purses (You have enough purses! Lol).
This will serve as the building blocks for you to GROW your savings. This savings is true not just for your 401K, 457 or other retirement accounts but also your liquid investment accounts. Give yourself the chance to invest as opportunities present themselves outside of your retirement account. For example, investing in cash flowing rental properties out of state, mortgage notes, the stock market, or even a small business. These are investments you do not have access to with your 401K.
Unless you win the lottery, you MUST save money in order to INVEST money. Plain and simple. The more you save NOW, the less you will need to work LATER.
Right now most of us work for money.
The goal is to have your money work for you. I’ll say that again because this is probably the most important concept of money.
The goal is to have your money work for you. I’m not going to write it a third time. It’s probably just easier to re-read it again. Actually, I think that’s redundant to re-read again…so maybe just re-read it. Boom. (there it is again!)
If you are not already paying yourself first when payday comes and you’re trying to grow your current financial situation…start there. This is a non negotiable.
Remember That Nobody Is Helping You Become Wealthy
This second idea of building wealth is more philosophical. As mentioned above, most people have a job where they exchange their time for an hourly wage or salary. This is not how you build wealth. It’s a START, but it doesn’t end there. I see too many people stop at the “job” part in thinking that’s how they will get ahead in life.
You’ll never earn enough by just exchanging your time for money. You MUST do more. And NOBODY is helping you get there. It is up to you and only you.
This is actually the fundamental reason why I started The Tobin Report. I’m pissed at how much we pay in taxes and I’m pissed that our taxes are SOOOOOO mismanaged. It’s reckless and criminal. There is nothing I can do to change that; however, with an awareness and an understanding of money in general, I believe we can all get ahead.
Here’s what I mean. Notice on your paycheck the various entities have their hand in your pocket. They all want their cut of your time. You have to pay federal taxes, state taxes, social security, and Medicare taxes, and there are deductions for health insurance if you are getting that through an employer.
You are left with the net difference. From this you pay bills and whatever life throws your way. Oh, and you’re paying taxes a second time on those things.
You MUST add your own line item. I don’t mean asking HR to actually add a line item, but you can automatically set your bank account to move money every two weeks into your E*Trade, Robinhood, or Bank of America account. But YOU have to do this. Nobody will do it for you.
$500 set aside today might be $5,000 in the future. That $5,000 in the future might mean retiring two weeks earlier because it covers those expenses. So every $500 you save today, shaves off 2 weeks at your JOB and more time to sip on old fashions.🥃
If I told you that every $500 you saved today gives you two weeks of freedom later, would you set it aside?
If you want to be wealthy, you must carve out a portion of your income NOW and place it into savings so that it can be invested.
Remember, nobody cares about your wealth…except you. And if you don’t care, then stop reading this and take yourself out to dinner.🍕🍽
Budget Like a Business Owner
Start managing your personal finances like a business. Make a budget. Seriously. If you refuse to set a budget, at least know where your money is going.
Successful business owners know what funds are coming in each month and how much is going out, more specifically, where it’s going as well. On the other hand, unsuccessful business owners have NO IDEA where their money is going. No budget. No accountability. Frivolous spending because there is “money in the account.”
Most people do not monitor the outgoing money and this is a fundamental error in money management. Again, I go back to the weight loss example. Successful weight loss often requires tracking and identifying what you are eating. Successful personal money management requires tracking expenses.
In the Hyde household (that’s me), we have everything set on auto pilot. I know exactly how much is going out every two weeks and where it’s going. My billpay is set to send out the bills that are due in that two week period. I use ONE credit card for ALL purchases so tracking is much easier. Yes, this does require your spouse to be on board. (No secret credit cards on the side!) My savings is an automatic and regular occurrence both in my retirement account, my E*Trade investing account, and my physical gold/silver accumulation.
What’s leftover is what we live on day to day. From here I can easily make any necessary adjustments to the Hyde Household, LLC (not actually a business, but I think it fits this segment, lol)
Quit Making Excuses
Lastly…excuses.
Nobody cares about your excuses. Seriously. Nobody. Okay, that was a bit rude but you get the point. You may actually have a valid excuse as to why you aren’t saving enough or growing your net worth…but this won’t get you anywhere. Figure out a way to change that.
If you really, truly want to buy that rental property for passive income, stop making excuses, quit going out to dinner, and put some money aside. You might be surprised how quickly you’ll save $5,000, $10,000 or $50,000.
If you start setting aside a little bit each paycheck and tracking expenses, I bet those excuses might start to dissipate. (was that a good word? It was fun to use)
➡ On the topic of setting aside a little bit each paycheck…
👇📈👇📈👇📈👇📈👇📈👇
MY FAVORITE RESOURCE FOR AUTOMATIC SAVING
I will leave you all with this tip for setting money aside. It’s my absolute favorite. Some of you have heard me talk about it.
Acorns.
I have been using the Acorns app for years and it’s a great way to SAVE and INVEST without even knowing it. Well, you’ll know it…but you won’t notice it day to day. You might even forget about it. (That’s a good thing!) I use this as a supplement to my primary investing but it could be a great way to start with smaller amounts for those having a hard time setting money aside.
It takes “spare change” and rounds up your purchases from your account and invests in a diversified portfolio or whatever you choose. You can set it up to double or triple up on these roundups. You can even set it up to deduct small amounts every week, two weeks or month. Whatever you choose. The best part is that it’s automatic once you set it up.
How do they make their money? $3/month fee. Straight forward.
Give it a whirl. I’m told you get $5 to start investing by using the link below.
👇👇👇👇👇👇👇
Start Saving and Investing with Acorns here
That’s all for this week. Thank you all for reading…or pretending to read it. Lol. I’d love for you to share this report with a friend, or in the case you don’t like The Tobin Report, share it with someone you don’t like. Either way is fine. Boom! (I gotta stop doing that!)