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Your Journey to $1 Million or more can start with Wealthlab

Financial Consulting

Blogs

Your Journey to $1 Million or more can start with Wealthlab

Financial Consulting

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Your Journey to $1 Million or more can start with Wealthlab

A family saving money together with a piggy bank, representing Wealthlab's approach to family wealth building and the goal of becoming a millionaire.

Here’s something that we, at Wealthlab, firmly believe: Almost anyone can be a millionaire.

It may not be easy. You may have to work much harder than your neighbour. But, you might be surprised at what’s possible once you put your mind to it. Your journey to a million starts right here (kind of).

First, if you’re not signed up as a Wealthlab client start now.

Next step, don’t be lucky.

Why?

Being lucky is great, but it’s not who we work with. Our work is designed for people who are building slowly and want to provide a comfortable retirement. If you’ve recently come into a windfall of funds, we are not the advisors for you! People who get lucky is also WAAAAAY less common than you probably think.

So here’s something that we at Wealthlab firmly believe: Almost anyone can be a millionaire. It may not be easy. You may have to work much harder than your neighbour. But, you might be surprised at what’s possible once you put your mind to it.

So to start, in our view, a realistic equation for wealth looks like this: Wealth = Income + Investments – Lifestyle.

Now, I want to draw your attention to a couple of critical elements.

Notice that “saving money” is not a part of the equation. Yes, saving money has value. An emergency fund is a great example of the benefit of saving money within the larger wealth-building timeline. And, notice that your lifestyle is a part of the equation.

In other words:

  • Income and investments build wealth (over time)
  • lifestyle expenses drain wealth
  • Whatever is left is the wealth that you truly posses
  • Wealth is Built Along a Timeline The wealth-building timeline looks like this

Very few of us manage to skip one of these stages and get away with it, by the way. 

We all go through these six stages. What do each of these stages mean?

Let’s find out.

Stage 1: Earn income with jobs or side hustles.

It’s impossible to build wealth without earning an income. The larger the income, the more growth potential. Note that you don’t need to earn a big salary to achieve financial independence or retire early, though it will take longer to build wealth with smaller salaries. That’s okay. This is a process, not a race.

Stage 2: A 6+ month emergency fund.

Building an emergency fund should come before investing – and definitely before spending on things that are not essential to your life. An emergency fund of at least six months means you can endure most financial emergencies, sudden job losses or anything else that necessitates a quick and big cash expense. If you don’t have an emergency fund, start one today. Start small. Save as much as you can. The key is to start building it NOW.

Stage 3: Start investing in appreciating assets.

Over time, investments are what builds wealth. Like I say in my eBook Big Money, there is always a risk associated with investments, but investing over the long haul is how most people build enough wealth to achieve financial freedom.

Stage 4: Automate savings and investing as much as possible.

Take the discipline out of the equation by setting up automatic transfers to fund your investments. This is also a good technique to use when building up your emergency fund, and most banks offer recurring money transfers. Leverage your super contributions for tax savings, educate yourself on risk and invest accordingly.

Stage 5: Control lifestyle creep by monitoring yourself.

Be honest with yourself about how you spend your money. Inspect your bank and credit card statements and understand every expense. Our lifestyles have a way of expanding as we earn more and more money. This process is called lifestyle creep (or inflation), and it eats away at our wealth. This process is not about being judgmental. It’s about caring enough about your future to reign yourself in.

Stage 6: Financial independence.

Congrats, you’re there (maybe?) But, don’t let your guard down. It’s possible to fall out of financial independence if we let our lifestyle get too expensive or extravagant. How do you know when you’ve reached financial independence?

It’s important to remember that income does not equal wealth. Too many people fall into the trap of believing that earning a high salary means they are rich.

Unfortunately, it’s not that simple. High-income debt is a big issue.

A high income lulls us into a comfortable feeling that we’re building wealth, but unless we are saving and investing a large portion of a big salary, nobody’s getting rich.

The pseudo-affluent are people who earn lots of money and spend the majority of it. They may drive top-end cars and demonstrate wealth in nouveau rich ways, but they are not building wealth.

Our eBook on the 4% study is one of the best ways to give you a ballpark understanding of your relative “level of independence”. You’ll get this when you sign up and complete your statement of advice document.

Note that it’s far from perfect, and it should NOT be relied upon as a full-proof guarantee that you’ve reached FI. But, I do believe it’s a good guideline.

Remember, Income Does Not Equal Wealth.

Too many people fall into the trap of believing that earning a high salary means they are “rich”. Unfortunately, it’s not that simple. High-income debt is a thing. In fact, it’s a BIG thing.

Here’s the problem: A high income lulls us into a comfortable feeling that we’re building wealth. But unless we are saving and investing a large portion of a big salary, nobody’s getting rich.

The pseudo-affluent are people who earn lots of money and spend the majority of it. Even things like (on car upgrades, holidays, big homes or less obvious but questionable master’s degrees. Home upgrades that don’t add value and others (our view) can leave people close to nothing left over. Certainly, close to the edge of running out of money.

The pseudo-affluent generally:

  • Earn a high-income, but spend the majority of what they make
  • Demonstrate wealth in nouveau rich ways
  • Drive top-end cars
  • Genuinely believe that rich people act rich

If you want to be a millionaire, you can – but it requires working with your adviser and holding a clear path. Want to learn more? Book a meeting, and let’s chat.