The years between twenties and thirties are deemed to be the years when peoples’ earning potential start to become a reality. At twenty, people are just getting started with their careers. Others do not even have an idea yet what they want to do with their lives. But as years fly by, the path they are destined to walk upon becomes clear to them. Hence, they start getting committed to a certain calling, which is also how they earn a living for themselves.
Twenties and thirties are quite a crucial time not just for building your career (and thus, your earning potential). It is also a time when people should start building a solid financial ground. It should never be neglected or taken for granted, because as many have come to realize, the earlier you start the better and longer time you have to grow your money. And as we often say about saving for the future, there is no such thing as “too early.” Now is the perfect time to really start building wealth.
The question is…how?
Okay, the word “wealth” might sound scary to some of you but it really doesn’t have to be. Let’s put things into proper context first.
What is wealth? Wealth is what you keep out of your income. Income is what you earn. Even if you earn a modest income but you are still able to keep some of it, then you have wealth. If you earn a big income but aren’t able to keep a penny, then you simply have a big income. It doesn’t mean you are wealthy.
When it comes to building wealth, there are actually no secrets involved. All the knowledge and tips have been shared…through books, blogs, seminars, video programs, etc. In fact, building wealth is so easy it boils down to one thing: imitate those who had done it before.
The question is…how did they do it?
Strategy #1: Live below your means.
This is primary, the prerequisite to what you aspire financially. Let me tell you my story.
I came here in the U.S. and established Financial Rescue LLC starting with only two people. From then on, Financial Rescue grew and is steadily growing every year. Today, we are known to hundreds of thousands of Filipinos living and working here in the U.S. However, not everyone knows what it took before I was able to establish it. It took living below my income, in order to save money. When the business opportunity came, I had the money to be able to at least start my business idea. I was not a twenty or thirty something by that time, but the money principle that helped me propel in establishing Financial Rescue LLC is the same: live below your means.
Strategy #2: Be bold enough to take action when ideas come
You might think that when I started Financial Rescue LLC, I was already swimming in a pool of cash. No, not at all. In fact, we were strapped for cash. But we were bold enough to grab the business opportunity, even if you don’t have enough resources. Thankfully also, you guys didn’t mind seeing my face on TV.
Kidding aside, the problem with having too much cash is that you tend to spend it all without being resourceful. It could work against you sometimes. Whereas when you are bootstrapping, you make do with what you have and force yourself to think creative ways to achieve what you aim to do with just a limited amount of resources.
Strategy #3: Invest in yourself
Sometimes, it seems unfair to see the world where there are people who do less work but are paid more than those who “seem” to do more. The truth is that you can’t just judge a job’s value based on how physically difficult it is. Some of the highest paying jobs don’t require a muscle; they only need the mind to create something out of nothing; the charisma to close an important deal; or the authority to command a thousand employees. These people are at the top of the food chain because their work adds massive financial value to the company. They are the motor that moves a company forward.
If you think that you cannot do Strategy #1 because you are underpaid for the work that you do, then it might be a good time to take a look at yourself from a job market point of view. What do you bring to the table? What skills do you currently have that those companies are willing to pay for at a considerable price? Are you willing to invest in yourself to acquire that skill?
Strategy #4: Invest in assets
If you can do Strategy #1, then you’re able to live below your means. That means you have extra money available for either keeping in a bank account or investing in assets. What are assets?
Assets are things that increase in value. Examples of assets are your 401(k), IRA, CDs, or your house and lot unit for rent or your own business. These things can make money for you even when you are asleep or vacationing somewhere. Passive income, as we call it, can help you build multiple income streams, while you are still busy working on your career. (Fact: the average millionaire has 7 income streams!)
The opposite of assets are liabilities or things that depreciate in value. Generally, these are material things that undergo the wear-and-tear life cycle, such as gadgets, cars, appliances, etc.
Understandably, twenty- and thirty-somethings (the Millennials, as we call them) are the boldest people around. Zuckerberg was a twenty-something when he established Facebook. Steve Jobs was a twenty-something when he established Apple. However, let’s admit that not all of us have their audacity and level of skill. It might take time more time for us to do Strategy #2, so in the meantime, it might be a great idea to have your savings invested in financial vehicles that can help your money grow without your own active involvement.
Strategy #5: Never get into debt
If you want to build wealth, then avoid debt as much as possible. Keep loans to a manageable level. Don’t use and abuse your credit cards. A lot of dreams have been crushed by debt. Retirement accounts drained by interest charges. Houses and cars repossessed, and retirees finding themselves starting all over again all because of debt.
It is a sad story for many of them but a lesson worth listening to for you twenty and thirty-somethings. Prioritize building wealth and never dabble into debt. If you can’t do Strategy #1 for now, at least, keep away from debt.