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What is your financial status and how did you achieve it?
I asked this because I want to know your financial struggles before and what steps you took to achieve your current financial status
5 answers
Updated
Doc’s Answer
Alphonso building wealth takes TIME, EFFORT and DISCIPLINE. The earlier you start putting these into practice, the better your chances of success.
EARN MONEY
The first thing you need to do is start making money. This step might seem obvious, but it's essential—you can't save what you don't have. You've probably seen charts showing that a small amount of money regularly saved and allowed to compound over time eventually can grow into a substantial sum. But those charts never answer this basic question: How do you get money to save in the first place. There are two basic ways of making money: through earned income or passive income. Earned income comes from what you do for a living, while passive income comes from investments. You probably won't have any passive income until you've earned enough money to begin investing.
DEVELOP A PLAN
What will you use your wealth for? Do you want to fund your retirement—maybe even an early retirement? Pay for your kids to go to college? Buy a second home? Donate your wealth to charity? Setting goals is an essential step in building wealth. When you have a clear vision of what you want to achieve, you can create a plan to help you get there. Start by defining your financial goals, such as saving for retirement, buying a home, or paying off debt. Be specific about how much money you need to achieve each goal and the time frame you hope to achieve it. Once you have set your goals, you should develop a plan for achieving them. This may involve creating a budget to help you save more money, increasing your income through education or career advancement, or investing in assets that will appreciate in value over time. Your plan should be realistic, flexible, and focused on the long term. Regularly review your progress and adjust as needed to keep yourself on track.
INVEST WISELY
Simply making money won't help you build wealth if you end up spending it all. Moreover, if you don't have enough money for your bills or an emergency, you should prioritize saving enough above all else. Once you’ve managed to set aside some money, the next step is investing it so that it will grow. Remember that interest rates on typical savings accounts tend to be very low, and your cash risks losing purchasing power over time to inflation. Perhaps the most important investing concept for beginners is diversification. Simply put, your goal should be to spread your money among different types of investments. That’s because investments perform differently at different times.
PROTECT YOUR ASSETS
You’ve worked hard to earn your money and grow your wealth. The worst thing could be to lose it all due to a sudden tragedy or unforeseen event. Insurance is key to building your wealth because it protects you from hazards. Home insurance will replace your home and belongings in case of a fire, auto insurance will make you whole after a car accident, and life insurance will pay your beneficiaries a death benefit in the case of an untimely death. Long-term disability insurance is another type of policy that will replace your income if you become injured, ill, or otherwise incapacitated and unable to continue working. Even young, healthy people should consider insurance products since they tend to become more expensive as you grow older. That means even if you are 25 years old and single, buying life insurance could be much more cost-effective than when you are 10 years older with a partner, children, and mortgage.
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 and protect your assets with insurance.
Remember Alphonso, building wealth is a journey, not a destination. Celebrate your successes along the way, and don’t get discouraged by setbacks or obstacles. With patience, discipline, and a clear vision of your goals, you can achieve financial success and build wealth over the long term.
EARN MONEY
The first thing you need to do is start making money. This step might seem obvious, but it's essential—you can't save what you don't have. You've probably seen charts showing that a small amount of money regularly saved and allowed to compound over time eventually can grow into a substantial sum. But those charts never answer this basic question: How do you get money to save in the first place. There are two basic ways of making money: through earned income or passive income. Earned income comes from what you do for a living, while passive income comes from investments. You probably won't have any passive income until you've earned enough money to begin investing.
DEVELOP A PLAN
What will you use your wealth for? Do you want to fund your retirement—maybe even an early retirement? Pay for your kids to go to college? Buy a second home? Donate your wealth to charity? Setting goals is an essential step in building wealth. When you have a clear vision of what you want to achieve, you can create a plan to help you get there. Start by defining your financial goals, such as saving for retirement, buying a home, or paying off debt. Be specific about how much money you need to achieve each goal and the time frame you hope to achieve it. Once you have set your goals, you should develop a plan for achieving them. This may involve creating a budget to help you save more money, increasing your income through education or career advancement, or investing in assets that will appreciate in value over time. Your plan should be realistic, flexible, and focused on the long term. Regularly review your progress and adjust as needed to keep yourself on track.
INVEST WISELY
Simply making money won't help you build wealth if you end up spending it all. Moreover, if you don't have enough money for your bills or an emergency, you should prioritize saving enough above all else. Once you’ve managed to set aside some money, the next step is investing it so that it will grow. Remember that interest rates on typical savings accounts tend to be very low, and your cash risks losing purchasing power over time to inflation. Perhaps the most important investing concept for beginners is diversification. Simply put, your goal should be to spread your money among different types of investments. That’s because investments perform differently at different times.
PROTECT YOUR ASSETS
You’ve worked hard to earn your money and grow your wealth. The worst thing could be to lose it all due to a sudden tragedy or unforeseen event. Insurance is key to building your wealth because it protects you from hazards. Home insurance will replace your home and belongings in case of a fire, auto insurance will make you whole after a car accident, and life insurance will pay your beneficiaries a death benefit in the case of an untimely death. Long-term disability insurance is another type of policy that will replace your income if you become injured, ill, or otherwise incapacitated and unable to continue working. Even young, healthy people should consider insurance products since they tend to become more expensive as you grow older. That means even if you are 25 years old and single, buying life insurance could be much more cost-effective than when you are 10 years older with a partner, children, and mortgage.
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 and protect your assets with insurance.
Remember Alphonso, building wealth is a journey, not a destination. Celebrate your successes along the way, and don’t get discouraged by setbacks or obstacles. With patience, discipline, and a clear vision of your goals, you can achieve financial success and build wealth over the long term.
Thank You Kim. You're a great person to work with Kim and I truly appreciate the support.
Doc Frick
Updated
Michelle’s Answer
Hello, Alphonso !
I am always happy to know that students are interested in their financial future to the extent that they are ready to take active steps for the education and possible practice of it. Concerning yourself with your own goals for the future is very important and I see that you certainly have the interest.
The first step to knowing about your own financial experiences would be education. I assume that you are in high school and if that is the case, you can take a business or accounting class. In college you can take a Finance or Business course. You can also take online money management courses that will help you understand as well as make decisions about how you would like to go about managing your own finances. I have left some article links as well as a link to a list of online money management classes you can take. I would advise obtaining employment as soon as you are ready to so you can have a paycheck and something to work with while you learn money management.
While in high school, students can inquire about Money Camps or Money Management workshops that their teachers or administrators know about. Some of these may be in the high school or in the community. One can also visit the local public Library to ask if there are any teen trainings on finance and money management. This will be a good way to learn more about how your financial future can go based on decisions you make when you are well informed.
Asking people about their own personal financial business will provide very little help to you because every person's experience with money is very different and no two people take exactly the same decision making path. Getting an idea of what everyone else does may not be the best route for you. It is an individual and personal thing and most times kept private or otherwise just generally and briefly spoken about.
I hope that this advice is a good start for you to learn about finances and money management and how you can apply what you learn to your own personal plans. Best wishes to you always !
MONEY MANGEMENT FOR YOUTH https://www.fdic.gov/resources/consumers/consumer-news/2021-06.html
GOOD MONEY HABITS FOR TEENS https://bettermoneyhabits.bankofamerica.com/en/personal-banking/money-management-for-teens
TEENS GUIDE TO BUILDING A STRONG PERSONAL FINANCE FOUNDATION https://www.moneygeek.com/financial-planning/personal-finance-for-teens/
13 FREE CLASSES TO HELP YOU MANAGE YOUR FINANCES https://www.themuse.com/advice/13-free-classes-to-help-you-manage-your-personal-finances-like-an-adult
I am always happy to know that students are interested in their financial future to the extent that they are ready to take active steps for the education and possible practice of it. Concerning yourself with your own goals for the future is very important and I see that you certainly have the interest.
The first step to knowing about your own financial experiences would be education. I assume that you are in high school and if that is the case, you can take a business or accounting class. In college you can take a Finance or Business course. You can also take online money management courses that will help you understand as well as make decisions about how you would like to go about managing your own finances. I have left some article links as well as a link to a list of online money management classes you can take. I would advise obtaining employment as soon as you are ready to so you can have a paycheck and something to work with while you learn money management.
While in high school, students can inquire about Money Camps or Money Management workshops that their teachers or administrators know about. Some of these may be in the high school or in the community. One can also visit the local public Library to ask if there are any teen trainings on finance and money management. This will be a good way to learn more about how your financial future can go based on decisions you make when you are well informed.
Asking people about their own personal financial business will provide very little help to you because every person's experience with money is very different and no two people take exactly the same decision making path. Getting an idea of what everyone else does may not be the best route for you. It is an individual and personal thing and most times kept private or otherwise just generally and briefly spoken about.
I hope that this advice is a good start for you to learn about finances and money management and how you can apply what you learn to your own personal plans. Best wishes to you always !
Michelle recommends the following next steps:
Updated
Kim’s Answer
Alphonso.
I'm happy to tell you my life story!
I'm 62, been disabled/retired for 6 years, and doing okay. I had my house paid off prior to retiring, and had saved up some money in deferred tax accounts, which I have not yet touched. I'm not one for traveling or luxury vacations, which helps a lot, nor do I have a bunch of relatives to buy gifts for. I basically keep to myself, and eat at home. (although I have some dog and gardening expenses!)
I became a police officer at the age of 22, and, when nothing was happening, we'd talk with each other. About everything. I listened to some of the older officers and started working to learn about investing.
But, before you start investing, there are some basics. You need to take care of your credit rating. It allows you to borrow money at a cheaper interest rate. Pay your bills in a timely manner. Set up an emergency fund. That is money you set aside for emergencies, so you can borrow from yourself rather than pay interest on a credit card. Speaking of which, do NOT run up credit cards. Do NOT get these crazy 30% interest rate cards - get the best rate you can on a mastercard or something, and try to pay the balance off in full. Paying interest is costly! If you can't afford it, don't buy it. (unless we're talking about necessities!)
Distinguish between wants and needs. Don't buy an expensive new car when a reliable used car will meet your needs. I've had only 5 cars, and only the one I have now was new. Don't buy impulsively. Go home and think about it. Oh, and my house was paid off very quickly, because I didn't buy the most expensive house I could get a loan for.
Insurance: don't go crazy getting insurance for everything, but get enough to cover the major setbacks you may face - car, health, disability (pays part of your salary if you physically can't work for a while), term life insurance if others are dependent on you, etc.
If you get some unexpected cash, such as an inheritance or accident settlement, do something productive with most of it. When you get a pay raise, remember, you were living just fine without that money the day before - invest most of it (sure, it's nice to enjoy part of it!) If your employer offers a 401 "match", this means they will put into savings as much as you do, up to a certain amount. Always contribute the maximum.
Marriage, children, all of that changes everything. If you are going to get married, make sure you both have the same perspective on family finances. Many marital disagreements stem from money.
Utilities, repairs, etc. Remember, the bigger the house, the more it will cost to heat and cool, as well as repair. Speaking of repairs - the more skills you can pick up, the less you will have to be paying others for making home repairs. Take some trades classes - basic plumbing, electrical, carpentry, auto repair, etc.
Record keeping. I track my expenses. And analyze them yearly. And I mean every single expense - I break my "groceries" down into "food," "toiletries" and "household items," for example. An end of year analysis, comparing to previous years (yes, I make pie charts" let's me see where my spending is creeping upwards.
All that being said, please remember!
Money is meant to make life easier, more enjoyable, etc. Don't get so focused on amassing wealth that you forget to enjoy life along the way.
Kim
I'm happy to tell you my life story!
I'm 62, been disabled/retired for 6 years, and doing okay. I had my house paid off prior to retiring, and had saved up some money in deferred tax accounts, which I have not yet touched. I'm not one for traveling or luxury vacations, which helps a lot, nor do I have a bunch of relatives to buy gifts for. I basically keep to myself, and eat at home. (although I have some dog and gardening expenses!)
I became a police officer at the age of 22, and, when nothing was happening, we'd talk with each other. About everything. I listened to some of the older officers and started working to learn about investing.
But, before you start investing, there are some basics. You need to take care of your credit rating. It allows you to borrow money at a cheaper interest rate. Pay your bills in a timely manner. Set up an emergency fund. That is money you set aside for emergencies, so you can borrow from yourself rather than pay interest on a credit card. Speaking of which, do NOT run up credit cards. Do NOT get these crazy 30% interest rate cards - get the best rate you can on a mastercard or something, and try to pay the balance off in full. Paying interest is costly! If you can't afford it, don't buy it. (unless we're talking about necessities!)
Distinguish between wants and needs. Don't buy an expensive new car when a reliable used car will meet your needs. I've had only 5 cars, and only the one I have now was new. Don't buy impulsively. Go home and think about it. Oh, and my house was paid off very quickly, because I didn't buy the most expensive house I could get a loan for.
Insurance: don't go crazy getting insurance for everything, but get enough to cover the major setbacks you may face - car, health, disability (pays part of your salary if you physically can't work for a while), term life insurance if others are dependent on you, etc.
If you get some unexpected cash, such as an inheritance or accident settlement, do something productive with most of it. When you get a pay raise, remember, you were living just fine without that money the day before - invest most of it (sure, it's nice to enjoy part of it!) If your employer offers a 401 "match", this means they will put into savings as much as you do, up to a certain amount. Always contribute the maximum.
Marriage, children, all of that changes everything. If you are going to get married, make sure you both have the same perspective on family finances. Many marital disagreements stem from money.
Utilities, repairs, etc. Remember, the bigger the house, the more it will cost to heat and cool, as well as repair. Speaking of repairs - the more skills you can pick up, the less you will have to be paying others for making home repairs. Take some trades classes - basic plumbing, electrical, carpentry, auto repair, etc.
Record keeping. I track my expenses. And analyze them yearly. And I mean every single expense - I break my "groceries" down into "food," "toiletries" and "household items," for example. An end of year analysis, comparing to previous years (yes, I make pie charts" let's me see where my spending is creeping upwards.
All that being said, please remember!
Money is meant to make life easier, more enjoyable, etc. Don't get so focused on amassing wealth that you forget to enjoy life along the way.
Kim
Updated
Owen’s Answer
Avoid debt unless you know for certain it will make you better off in the long run. Especially credit card debt, its very very easy to get the money, but the credit card companies structure it so that you keep that debt for as long as possible so that they make out on your interest payments. Invest in index mutual funds or ETFs for as long as you are able. Putting a little bit of each and every pay check will ensure that you are saving and will benefit from gradual market appreciation over a very long period (40+ year investment horizon). Many companies will match your retirement investments up to a certain dollar amount or percentage, this is essentially "free money" that will benefit you greatly in the long run. Choosing low cost investments will help you keep more money in your pocket and will increase your nest egg exponentially over the long run. Don't spend more than you have. If you can't afford a vacation, don't charge it to your credit card thinking you will pay it off later. Rather, save a portion of your pay check each week and eventually you will have the cash to pay for your holiday. Don't spend foolishly.
Updated
John’s Answer
It seems like you're on the hunt for a roadmap to financial prosperity, which can mean different things to different people. While some might equate success with a lucrative job, I personally define financial success as a healthy personal balance sheet, essentially a favorable ratio of assets to liabilities. To reach this goal, it's crucial to have a clear target and a well-thought-out plan. Consulting with a financial advisor could be beneficial, but you'll need a concrete aim, like amassing a million dollars or securing an annual retirement income of $50,000. To achieve this, regular saving is key, allowing your wealth to accumulate over time. Consider investing in a home with the aim of owning it outright by the time you retire, and keep your fingers crossed that social security is still in play. According to Fidelity, you should aim to save ten times your annual income if you want to maintain your current lifestyle in retirement.
The golden rule is to prioritize paying yourself first. Between my employer's contribution and my own, I manage to save 18% of my salary every year. This has been achieved through incremental increases tied to my annual pay raises over the years.
I've seen too many people, especially those just starting out, splurge on luxury cars, which depreciate in value, rather than saving a bit more for a home, an asset that appreciates over time. This is a much smarter financial move.
In the grand scheme of things, if you can strike a balance between saving money and enjoying life, you're on the right track. Just remember, always pay yourself first. It's the key to financial success.
The golden rule is to prioritize paying yourself first. Between my employer's contribution and my own, I manage to save 18% of my salary every year. This has been achieved through incremental increases tied to my annual pay raises over the years.
I've seen too many people, especially those just starting out, splurge on luxury cars, which depreciate in value, rather than saving a bit more for a home, an asset that appreciates over time. This is a much smarter financial move.
In the grand scheme of things, if you can strike a balance between saving money and enjoying life, you're on the right track. Just remember, always pay yourself first. It's the key to financial success.
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