Why You Should Focus on Building Wealth...Instead of Just Saving Money (2024)
By Stacy Williams
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Stop the presses! I know. I’m late on this post today. It happens. 😀 Why am I late? Because I was doing some work for a few other bloggers. That’s okay. Like I said. It happens. Next time, I’ll plan my schedule better. Aside from the fact that I’m late, maybe you’re wondering WHY I was working for other bloggers?It’s not because I desperately need the cash. While any cash is great, it’s simply because I want MORE cash than I have now. Why do I want more money? Because I’m trying to build wealth for my family…and you should be too.
Building wealth for ourselves and our families is so important. Except we are also told that saving money is too. Figuring out which one is correct can be a truly mind-blowing experience for some…especially if you’re new to the whole shebang.
Let me help you bust through the confusion…they’re BOTH right.
When we look at building our financial lives we need to not only be looking at saving for emergencies, but also building our retirement and building wealth at the same time. By doing so, we ensure that we have a fund set aside for whatever life seems to throw at you and that when it’s time to retire or quit working, you’ll have enough to live comfortably. Savings alone won’t provide the life that we are looking for, but neither will wealth. I don’t know about you, but for me personally, I want to know that not only are those emergencies and my “wants” are covered, but that there is enough money in the account to cover any regular expenses that we may have as well as enough to retire on. I’m not getting any younger and even though I’m only 33, retirement has been on my mind a lot lately.
Savings accounts, while they’re a must have? They don’t grow very well. Even a money market account, which typically has a higher interest rate than a regular savings account, won’t grow for you the way that an investment can. So your money kind of just sits in that account, accruing a few pennies a year interest when it could be out earning for itself. That’s why it’s so important to do both. Yes, keep your savings accounts. Build them up to where you could live off of them if you needed to, but take the rest of your money and plant it. If each dollar is a seed then plant them deep so that eventually you do have the proverbial money tree.
So how do you do both? It’s not as hard as you may think.
To start with you’ll want to build your emergency fund first. This one is by far the most important of the two accounts. You’ll want to build it up to $1,000 as quickly as you can. This may not be as hard as you think since just $16.66 per day can help you get there in just 2 months. You must have these funds set aside for those pop up emergencies like car repair or a sudden family trip. Once that is set up, think about other savings that you might need. Do you want 3-6 months of living expenses in the bank? Do you want to have an account set aside for a new car? Whatever it is, make sure that you have the accounts for them taken care of and at least half full before you start to work on building wealth.
Once you’ve got that taken care of, it’s time to move on to building your retirement and building wealth. I love the text message method that I use, but if that isn’t something you want to look at doing, consider talking with a financial advisor. Investments are a great way to build your financial portfolio. For new investors, go with something a bit “safer” like a bond or a money market account (although do keep in mind that there are no truly safe investments and that everyone carries risk). Bonds are easily to understand though and depending on what you pay for the bonds themselves can net a nice, tidy profit for you.
As you’re building your portfolio, be sure that you don’t forget to save too. Doubling up on what you’re doing financially is never a bad thing (unless you’re doubling up on spending of course). Continue to save, continue to build and when you’re ready? You will have built a financial future for yourself and your family like you’ve never imagined.
Learning how to build wealth is essential for financial security and independence. If you have financial goals, such as buying a house, paying for your kids' college or securing a comfortable retirement, building wealth is the key to achieving those objectives.
Investing provides the potential for (significantly) higher returns than saving. As your investments grow, they allow you to take advantage of compounding to accelerate gains. Investing offers many different access points and strategies, from individual stocks and bonds to mutual or exchange-traded funds.
Savings negate much of that weakness (inflation is an example of a persisting weakness), it will be mostly in your control, and, as such, you can use it to control your wealth and your future. That's why savings are more important: they can dictate where you will be in the next 10 years.
It is important because it can provide access to better housing, education, healthcare, and other resources that can improve overall quality of life. Wealth can also provide financial security and peace of mind, reducing stress and anxiety associated with financial instability.
Wealth is often thought of in terms of money and material possessions, but it can also refer to other forms of assets such as property and investments. Having a level of wealth can provide a sense of security and freedom, allowing for financial independence and the ability to achieve our goals and aspirations.
While get-rich-quick schemes sometimes may be enticing, the tried-and-true way to build wealth is through regular saving and investing—and patiently allowing that money to grow over time. It's fine to start small. The important thing is to start and to start early. Earn money and then save and invest it smartly.
The future is unpredictable, and financial emergencies can crop up anytime. Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.
Saving and investing are both important components of a healthy financial plan. Saving provides a safety net and a way to achieve short-term goals, while investing has the potential for higher long-term returns and can help achieve long-term financial goals. However, investing also comes with the risk of losing money.
Saving money is like the appetizer of financial success. It's a crucial first step, but it won't be the main course that makes you rich. The paradox lies in the fact that while saving money is essential for financial stability and security, it won't necessarily propel you into the realm of the wealthy.
A savings account won't do much to help you grow your net worth. Investing in tax-advantaged accounts can go a long way toward helping you save the money you need to be wealthy. You should take advantage of 401(k) and IRA accounts and buy assets that will help you earn generous returns.
Savings account benefits include safety for your savings, interest earnings and easy access to your money. However, savings accounts may have drawbacks, such as variable interest rates, minimum balance requirements and fees.
Having wealth doesn't just provide you with money to buy stuff; it provides you with freedom and control over your life. In my previous article titled, “How Lifestyle Creep Can Ruin Your Future”, I discussed how we tend to spend more when we earn more money. Fighting this urge can help you build wealth.
There is a difference between being rich and being wealthy in terms of money and financial resources. Being rich typically means having a lot of possessions and material wealth, while being wealthy is more about having sustainable and lasting wealth.
Being rich may sound like the dream, but it's not a guarantee for long-term financial security. To truly secure your financial future, it's important to aim for wealth. Wealth provides a sense of financial freedom and stability that being rich cannot always offer.
Building wealth is essential for every individual because it gives them stability, security, and the capacity to reach their long-term financial goals. The importance of wealth creation is that it helps you with retirement planning, creates passive income, and lessens dependency on loans.
“The Way to Wealth” was not really about wealth as we think of it today. Its message was about how to accumulate enough to have material security, personal independence, and social respectability. The means to do so were basically hard work and frugality.
The wealth effect is a behavioral economic theory suggesting that people spend more as the value of their assets rise. The idea is that consumers feel more financially secure and confident about their wealth when their homes or investment portfolios increase in value.
Human beings need money to pay for all the things that make your life possible, such as shelter, food, healthcare bills, and a good education. You don't necessarily need to be Bill Gates or have a lot of money to pay for these things, but you will need some money until the day you die.
Introduction: My name is Duane Harber, I am a modern, clever, handsome, fair, agreeable, inexpensive, beautiful person who loves writing and wants to share my knowledge and understanding with you.
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