Accumulating Wealth and The Big Picture

Accumulating Wealth and The Big Picture

The thing I find fascinating is when people rush into things financially, without thinking of the big picture. The big picture is something I always think about. I always ask myself questions before making decisions, do I have enough money? Will I ever have enough? When will I need it by? Will I ever be able to afford this or that? How will I even accumulate the cash?

When people my age tell me about the next cool materialistic thing they have, it amazes me. The materialistic world has brainwashed a generation (my generation especially) into thinking that having those things defines success, and that you need to have them in order to be respected. I beg to differ. To me, wealth is more than having money, it is having family, friends, girlfriend or wife, kids, and of course having a sufficient amount of funds to take care off all of that. The way I think about it is the big picture, as I stated above. When people first get married, early 20s, fresh out of college, hardly even having a stable job or accumulated any money, how do you support yourself? Then before you know it you are having kids, buying a house, and obviously going to need a car. All these debts you will have, where will the money come from? This is why people head into some serious debt, living paycheck to paycheck. Rushing into things is never a good sign, especially things that can put you in a hole with the credit companies. 

In my opinion, this is why people struggle to get on their feet and never be able to fully live their life. Living paycheck to paycheck can be a struggle, never being able to save money and always having to pay people back. Take it one step at a time. When you first get out of college, or even high school for that matter, start saving money no matter what percentage of your paycheck it is. Pay yourself first philosophy is the one code I live by. Set up a few different types of accounts, Roth IRA, Joint WROS or  Individual, IRA, 401(K) with the company you work with, and always try to max out your retirement funds. I will go more in depth on different types of bank accounts on another post. Live below your means, meaning, if you know you can't afford it don't bother wasting your time and money on it. Example, instead of buying a nice luxury car like a Lexus, Infiniti, Acura, right out of college, buy a Honda Civic, Nissan, or Mazda. Don't let materialistic items and your ego get in the way of not being able to be financially stable. Insurance and leasing price (unless you buy full) on a Honda will be much cheaper than a luxury car, once again, live below your means until your wealth has accumulated. Another example, the average price to raise a kid is around $200,000 the last time I checked, so unless you know you can 100 percent afford to raise a kid during your early 20s. Until you can fully sustain yourself, you should not be worrying about raising a child of your own.

Restrain yourself from buying unnecessary items, instead of spending your first bonus paycheck on a boat, vacation, or car, invest it into a long-term mutual fund or stock pick and diversify a portfolio if you have not started investing already, and do not forget to max out your tax-exempt accounts as much as possible too. This way your bonus money can grow and produce more money without even touching it. Investing is a powerful tool when used with caution, intelligence, and research. Living paycheck to paycheck can also put a burden on emotional stress, always having to worry about how you're going to pay the next cell phone bill, mortgage payment, car payment, or any bill in general. This is why I want to urge people to live below their means and I will keep repeating myself until it is embedded into your brains.

My next post will focus on how to read a company summary on Yahoo! Finance, and understand the key terms labeled on it.

Remember, live below your means, and do not let your ego and materialistic items flood your thinking for a better life. Do not be a big hat, no cattle type of person!

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Chris Barto