The Secrets to Building Wealth: 3 Habits of Highly Successful Savers

My blog focuses on Financial Literacy/Money. Wealth building is something everyone wants to do, but it’s a thing that’s easier said than done. The following contributed post is entitled, The Secrets to Building Wealth: 3 Habits of Highly Successful Savers.

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Building wealth isn’t just about earning the top salary or winning the lottery; it’s also about creating smart financial habits that stand the test of time. For highly successful savers, growing wealth is the result of being disciplined, having a plan in place, and being consistent.

Photo by Bich Tran: https://www.pexels.com/photo/savings-tracker-on-brown-wooden-surface-732444/

By adopting these three habits, you can take charge of your finances and set yourself up for long-term financial success.

Prioritise Saving With a Purpose

The best savers don’t just save money; they have goals in mind when they do it. Whether it is for retirement, a new home, or an emergency fund, every bit of money saved has a designated purpose. To start with, create a budget that prioritises saving and identify areas where you can cut back on unnecessary expenses and redirect those funds toward your goals. When you automate your savings, it is a great way for you to stay on track. Set up a direct deposit from your paycheck into a high-yield savings account or investment portfolio. Having goals in mind will not only provide you motivation but make it easier to measure your progress. For example, saving for a six-month emergency fund can be broken down into smaller chunks, making it easier to achieve.

Reduce Debt Strategically

Debt is a huge barrier when it comes to growing wealth. The interest on high credit card balances or personal loans can quickly drain your income and limit your ability to save or invest. That is why successful savers focus on reducing debt as fast as they can and as strategically as possible. One effective strategy for debt consolidation is using a financial tool that combines multiple debts into a single loan, often with a lower interest rate and more manageable monthly payments. Consolidation simplifies your finances and can save you money on interest in the long run. If you are struggling to juggle multiple payments or want to explore ways to get your debt gone faster, consider looking into debt consolidation. It’s a great step toward financial freedom, giving you more room to grow your wealth.

Invest Wisely For Long-Term Growth

Saving is important and should be considered essential, but investing is what truly builds wealth. Successful savers understand the importance of putting their money to work for them by making smart investments. The key is to start as early as possible and be consistent; even with just small amounts, compound interest can turn modest contributions into big wealth over time. Try to diversify your portfolio as much as possible by including a mix of stocks, funds, and other assets that align with your risk tolerance and financial goals. Look at your investments on a regular basis and adjust them as needed to ensure that they always meet your goals. It might be a good idea to seek advice from a financial advisor, as they can help you make the right decisions and maximise your returns.

Conclusion

Building wealth is not an overnight achievement; it is something that requires commitment and smart financial habits. By prioritizing saving, lowering your debt through tools like debt consolidation, and investing for long-term growth, you can start to build a financial foundation that is going to grow your financial wealth.

Is Wealth Building Boring? Should It Be? A 2024 Financial Thought Piece

“The fact that you don’t have any major financial hiccups or issues or news to report is a good thing!”

A Quick Plug

Hello. Thank you for clicking on this link and I hope you enjoy this essay. Writing a book was the genesis of me blogging and becoming a video content creator. I am close to publishing part one of my book project entitled, The Engineers: A Western New York Basketball Story. Please consider visiting the page to learn more about the project and see promotional content I’ve created surrounding the project. And now on to our feature presentation.

I Don’t Like Your Financial Messages!

“I’ve seen some of the financial writings you post on Facebook Anwar and I don’t like them,” an acquaintance I’ll anonymously call Jenny told me at a social gathering in upstate New York. Jenny was a lawyer who I knew for years. We were in school at the same time at a highly prestigious anonymous university.

We weren’t what I would consider close but her words surprised me and were worth capturing. I knew Jenny well enough to know why my financial writings would cause her heartburn. My writings encouraged smart money management and planning which some would consider being frugal. Frugal is a word that is often confused with being cheap. I wrote an essay about that years ago which you can read at this link.

Jenny’s words surprised me because as a print and video content creator, you never know who is consuming your content until they say something. One of the podcaster Chris Williamson’s guests in fact stated that less than 10% of viewers openly interact with your content. The majority are ‘lurkers’ who watch and observe but don’t say anything. Jenny lurked and revealed her disapproval of my frugal messaging when I least expected it. Jenny will appear towards the end of this essay and will help me finish it up, so stay tuned.

My Financial Team’s Surprising Assessment

If the title of this blog post sucked you in, it was meant to. This is not clickbait though I can assure you. This piece was inspired by real life experiences like many of my writings and it is certain to touch someone. The principle of wealth building being boring is something I’d heard about several times up until now, but this particular experience made it stick in my mind and craft this essay. This happens a lot in life.

“The fact that you don’t have any major financial hiccups or issues or news to report is a good thing,” a member of the anonymous gentlemen I refer to as my financial team said. “Wealth building is supposed to be boring and unexciting,” the other member continued. “Keep doing what you are doing Dr. Dunbar. You are doing well.”

The Era of Consumption

Wealth building is supposed to be boring? I was surprised but not surprised to hear them say this. They were both two financially savvy men who were well versed in the markets and trends. They were further not the types to follow the crowd and societal trends in terms of consumption and spending. It made sense that they would make such comments and conclusions.

Their words were in direct opposition to the mass marketing we’re all bombarded with which emphasizes consumption above all else. Being a content creator compels me to spend time on social media, more than I admittedly should at times. Regardless of the platform, I see the consumption and the excesses, some of which makes you wonder how people are paying for the things they’re doing. Take a peek into the world of Instagram to see what I’m talking about. Also look up ads from companies such as Temu. That said, you see similar things in real life too, so consumption and overspending are not restricted to cyberspace.

Boring Habits

“What are you having for dinner later on?” An acquaintance from the church I attended asked me about the remainder of my day after service one Sunday.

“Oh I’m going to have some leftover beans and rice (Emiril Lagasses’s recipe),” I replied, feeling good about my cooking skills.

“That’s boring. That’s boring,” she playfully jabbed at me, but also partially being serious.

I didn’t know what to think when she said this to me. Eating leftovers was a part of my lifestyle growing up that stayed with me over the years. It made sense to me to make large quantities of a meal and then to continue to eat it in the future. It was very cost effective too and ‘stretched’ dollars out. I also understood in hindsight that this habit could be seen as boring to individuals who solely eat out and who can’t cook or both.

I later found that part of the culture of the Washington, DC metro area, particularly among the black professionals, was eating out, eating out well and not a chain restaurants (Applebee’s, TGI Fridays or Ruby Tuesday for example). Many people proudly touted themselves as ‘foodies’. Sunday brunch after church services was more holy for some people than the actual morning worship.

What might be some other boring habits? The following are potentially boring habits:

● Regularly cooking as opposed to eating out
● Eating leftovers
● Bringing your lunch to work regularly
● Budgeting and planning out expenses
● Budgeting for and wisely planning out vacations
● Sticking to your budget
● Buying based upon your needs versus your wants
● Thinking long-term and setting spending goals/limits

Retirement Savings: Another Boring Wealth Building Habit

“If you’re not saving in your Thrift Savings Plan (TSP), you’re leaving money on the table.” Retirement savings is another boring wealth building habit. I did not understand my TSP when I first started my federal career. My financial team and others impressed the importance of investing in it early enough where it could be an asset to me in my later years.

There are in fact a group of people who are ‘TSP Millionaires’. These are self-made millionaires who gradually saved into their accounts and by the time they were ready to retire, they were literally millionaires. It wasn’t done in a flashy way as we often see in pop culture and on social media, but instead through methodical savings from every paycheck, budgeting and prioritization. It further involved choosing the right assets/funds within their accounts to take advantage of the Law of Compounding Interest.

As a disclaimer I received assistance on this latter aspect. If you’re able save money in a retirement account of any kind, but aren’t savvy in terms of where to invest the money, I recommend finding someone who has already successfully started and is willing to teach you. In other words you should find a trustworthy expert.

What is Wealth Building?

No. Wealth building doesn’t mean a boring life. It can actually be quite fun dodging the snares of creditors who are always on the hunt for more prey. It just means going against the grain of what we as a society are being encouraged to uncontrollably do which is to spend. When you think about wealth, think about your Net Worth which is the difference between your cash and assets and your liabilities. Debt is a very bad thing for financially minded people. They are careful about using it and seek to control the use of it at all costs. Visit the channel entitled, Savings Minus Debt on YouTube to get an outlook on debt that you’ve probably never heard before.

Proverbs 22:7 in fact says that, “The rich rule over the poor and the borrower is slave to the lender.” I have personally found that to be true as I got myself into some really deep debt trouble at one point in my life. It is a stretch that I will never forget as I never wish to go back there.

“The banks would call me a freeloader. I pay off all my credit card balances at the end of the month but I gladly use the airline miles they give me,” talk show host Bruce Williams said nightly on his broadcasts in the early 2000s, one of my favorites of all time. Bruce talked about the wise use of retail credit cards which involved paying off all of his balances every month but gladly accepting the benefits. Do you pay off all your balances or pay the debt every month?

Can You Afford A $400 Expense?

Another interesting finding as I learned about money was that many Americans can’t afford a $400 emergency expense. I think Rodney Brooks of the Washington Post wrote the initial piece about this phenomenon. If I can find it, I’ll link to it. Similar pieces have been written throughout the years though.

A surprising finding for me though was that there were quite a few members of the prestigious six figure club who couldn’t cover a $400 expense. How is this possible? Well first everyone’s situation is different but there are several explanations for six figure earners who can’t cover a $400 emergency expense. One is the afore-mentioned debt. Debt can cripple your finances even if you are a high earner.

The conclusion most come to is overspending and poor money management. Money management in itself does take work because you have to sit down, proactively do the math and stick to the budget, or spending plan you’ve devised. This is part of the conundrum though. Aren’t you supposed to be able to spend whatever you want to if you’re a high earner? What do you think?

Closing Thoughts

This essay was written with some subtle humor in case you didn’t pick up on it. I first heard about wealth building being boring from an anonymous individual on YouTube I’ll call Ra-El in a livestream discussion. He was another ‘money guy’ who was interested in this topic of wealth building. Saving and investing money versus spending it is a major point of contention between couples today for those who don’t know. I also want to acknowledge that in this summer of 2024, many people in the United States and around the world are grappling with their daily financial survival which is a separate set of considerations than retirement savings. If you’re fortunate to have resources where survival is not a concern, then this topic is something you should consider.

I further want to close this essay by stating that I am not a financial professional. I am a scientist, writer and storyteller. I am also a very effective budgeter. I am not an expert at investing. I rely on individuals who are smarter than me in those areas. I can tell you that investing correctly requires a level of financial budgeting, restraint and prioritization. But is that all there is?

My financial team further shared the basis for the follow up piece to this one with me. It was a piece of advice stating that those who have wisely saved and invested should eventually get to a point where they should enjoy seeing their investments grow. Furthermore, saving for the sake of saving is just suffering. It was a profound lesson for someone disciplined like me. Look out for that essay. Finally thank you to my folks for not raising me in a consumerist mindset and my financial team for your guidance and encouragement. Finally thank you to Jenny for inspiring me to write this essay in addition to my financial team.

The Big Words LLC Newsletter

For the next phase of my writing journey, I’m starting a monthly newsletter for my writing and video content creation company, the Big Words LLC. In it, I plan to share inspirational words, pieces from this blog and my first blog, and select videos from my four YouTube channels. Finally, I will share updates for my book project The Engineers: A Western New York Basketball Story. Your personal information and privacy will be protected. Click this link and register using the sign-up button at the bottom of the announcement. If there is some issue signing up using the link provided, you can also email me at bwllcnl@gmail.com . Best Regards.

Unique Investment Options That Can Increase Your Wealth

Two focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. To win in the money game you have to execute several aspects. One is spotting investment options. The following contributed post is entitled, Unique Investment Options That Can Increase Your Wealth.

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There are many unique investment options available to investors that can help them grow their wealth. This blog post will discuss a few of these options and how they can benefit investors. You’ll also find some information on how to get started with these investments and what risks are involved. So, if you’re looking for new and exciting ways to invest your money, read on!

via Pexels

Peer-to-peer lending

One unique investment option that can help increase your wealth is peer-to-peer lending. With this type of investment, you loan money to individuals or businesses through online platforms. The borrowers then use the funds for a variety of purposes, including debt consolidation, business expansion, and more. In return for lending the money, you earn interest on the loan.

Peer-to-peer lending is a great way to earn passive income and grow your wealth over time. It’s also a relatively low risk since the loans are typically backed by collateral. If you’re interested in learning more about peer-to-peer lending, check out our blog post on the topic.

NFTs

Another unique investment option that’s gained popularity in recent years is NFTs. NFTs are digital assets that can be sold, traded, or used in a variety of ways. They’re often created by artists and can take the form of artwork, videos, audio files, and more on the nft market.

NFTs have become popular due to their rarity and the fact that they’re often created by well-known artists. As a result, they can be quite valuable. In fact, some NFTs have sold for millions of dollars! If you’re interested in investing in NFTs, there are a few things you should know before getting started. Check out our blog post on the topic for more information.

Cryptocurrencies

Cryptocurrencies are another unique investment option that can help you grow your wealth. Cryptocurrencies are digital or virtual tokens that can be used to purchase goods and services. They’re also often traded on exchanges, similar to stocks and other securities.

Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, thousands of other cryptocurrencies have been created. Some of the more popular ones include Ethereum, Litecoin, and Dogecoin. Of course, cryptocurrencies can be volatile, so they’re not for everyone. But if you’re willing to take on the risk, they could offer the potential for high returns.

Real estate

Investing in real estate is another great way to grow your wealth. When you invest in real estate, you’re essentially buying a piece of property that can be used for a variety of purposes, such as housing, commercial businesses, or even farming. Real estate can be a great investment because it’s relatively low risk and has the potential for high returns. Check out David DeQuattro for some inspiration on success in real estate. As a long-term investment, you stand to make some great returns with real estate.

There are a few different ways to invest in real estate. One option is to buy an existing property and then rent it out to tenants. This will allow you to earn passive income from the rental payments. Another option is to purchase land and then build on it. This can be more risky than buying an existing property, but it also has the potential for higher returns.

In conclusion, there are many unique investment options available that can help you grow your wealth. Peer-to-peer lending, NFTs, cryptocurrencies, and real estate are just a few of the many possibilities. So do your research and carefully consider each option before making any decisions. And remember, as with any investment, there is always some risk involved. But if you’re willing to take on a little risk, you could potentially earn high returns.

How Owning A Corporation Massively Adds To Your Wealth

Two focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. Becoming wealthy doesn’t come of out of nowhere. There is a lot of planning and strategizing involved and a part of that involves creating business structures such as corporations. The following contributed post is entitled, How Owning A Corporation Massively Adds To Your Wealth.

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What’s the secret of the rich?

It’s not (usually) meeting in darkened rooms and plotting how to take over the world. And it’s (usually) not exploiting people endlessly.

Instead, it’s using a legal tool called a corporation.

Corporations aren’t just nice titles that companies have. They have real legal status and can have a massive impact on the amount of tax that you wind up paying.

The Value Of Corporations

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Let’s say that you sell lifestyle coaching services online.

If you operate as a sole trader, you have to pay full income taxes – regardless of what you do with the money you receive.

However, when you own a corporation, it’s a different story. You only pay taxes on earnings net of your expenses. And there are many accepted accounting practices you can use to reduce your liabilities.

The wealthy use corporations as a kind of shield from high rates of taxation to protect themselves from income taxes and to increase the amount of money they can invest.

When a person owns a corporation, they pay a lower rate of tax on any money they make within the business. They can then plow this money into investments and draw down on their returns later, without having to pay tax on income first.

Yes – corporation owners still have to pay tax when taking dividends. But they often only do this once interest accumulates on their investments held within the company. And that means that the burden of taxation is actually a lot less than it would have been otherwise.

Corporation taxes are a big deal. Upper rate taxpayers usually pay around 50 percent of their income in various types of income taxes. But corporations only pay corporation tax rates on their earnings – usually a much more reasonable 20 percent or so.

Can you see the difference here? If you earn money outside of a corporation, your tax rate is much higher, and more of your income winds up going to the government. But when you protect your labor inside limited liability companies, you massively reduce your tax bills.

Wealth Is A Mindset

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Most workers don’t know about the benefits of corporations. And to the cynical observer, this seems deliberate. If everyone used these corporate vehicles, the state would have to find other ways to raise taxes, probably by increasing rates on companies.

But a lot of it has to do with mindset. People don’t see themselves as companies, and they don’t understand the advantage of using them for tax purposes.

In many ways, this is a reflection of mindset. A lot of individuals can’t imagine themselves as anything other than poor. And so they spend their entire lives working, instead of taking the steps necessary to improve their situation.

Acquiring a wealth mindset is all about seeing yourself in a different light.

If you’re the type of person who says things like “I’ll never earn more than X amount during my life,” then you probably have a scarcity mindset. You’re putting limits on what you can achieve.

Mostly, people who are victims of this mentality aren’t even aware they’re doing it. It’s all unconscious, but it informs the decisions they make daily.

The good news is that you can often change this inner belief to something more positive, even if you’re living in a state of literal poverty right now. It requires identifying the false beliefs that you hold and consciously disregarding them.

Once you change your mindset, the prospect of owning a company makes a lot of sense, even if you’re the only person in it.

Growth Is Also A Mindset

Owning a company also changes your mindset regarding growth too.

When you’re a sole trader, you come to believe that it’s you against the world. You’re by yourself.

But when you own a company, the psychology changes enormously. All of a sudden, you see opportunities to grow and expand, increasing your overall earnings significantly.

Remember, when you have a company, you limit your personal liabilities. Thus, you can take risks that would seem unthinkable as a sole trader. If things go wrong, your house and car are not on the line.

That’s another reason the rich absolutely love limited companies. They allow them to privatize the gains from enterprise while socializing the losses.

If a company doesn’t make money, it’s no big deal. Administrators come in and liquidate all the assets the company owns, and the entrepreneur walks away with their house, car, and private investments intact.

It seems like a crazy setup – and it is – but again, most people don’t know about it. They’re still going about their lives, believing that working for a corporation is the only option. That’s not true. Being a corporation is a much better strategy.

Think about how your attitude toward growth would change if your investments were less risky. All of a sudden, you’d start thinking of ways to expand your services and hire more people. Ultimately, you’d look for ways to make more money and get ahead of the curve.

Plot Your Own Path

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Another reason people struggle with their finances and don’t set up corporations is that they’re following the path other people have laid out for them.

Again, this is a big no-no.

Most wealthy people do not follow the advice of others. Instead, they rely on their own judgment and use it to chart a new course that nobody has tried before.

And, for the most part, that involves owning a corporation in one form or another.

Remember, corporations offer so many advantages over traditional sole trader status or partnerships. And that makes them incredibly flexible. You can, for instance, sell goods in multiple countries but only pay taxes in one. Or take out loans in your company’s name, not your own, to get the equipment you need to thrive.

So, in summary, corporations are tools that you can use to massively add to your wealth. They protect you against risk and tax while allowing you to build wealth and expand.

If You Don’t Own Something Your Wealthy Isn’t Real

Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. Understanding the difference between assets and liabilities is critical to understanding and building wealth. Likewise, simply having a job and working for ‘earned income’ versus acquiring money-generating assets is the difference between solely being an employee and one day becoming financially independent. The following contributed post is entitled, If You Don’t Own Something Your Wealthy Isn’t Real.

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We are all beholden to the economy of the nation we live in. The nation’s economy is beholden to the global economy. And round and round we go, in this daisy chain of ours. Everything is affected by everything else. Now, your biggest concern is your personal wealth; as it should be. The secret to protecting your wealth is to try and make it insular from everything else. In other words, you want to have a wealth that isn’t affected by the outside world. But, as aforementioned everything is tied to everything else. Whether you’re shopping for clothes, buying groceries or applying for a mortgage, before the price is levelled at your feet it has to go through the market. The market determines what that price will be. So two things we can conclude. There’s no way for your wealth to not be affected by the global economy and the market is how price is determined; in other words your wealth is given it’s true value. The giants that tower over everything else are assets. If you’re not holding something, owning something and backing up your monetary wealth by an asset, it’s not real.

What is an asset?

Firstly an asset is a complex entity to describe. However, for the sake of simplifying things, think of assets as something other than cold hard cash. Yet there are some people who will include their cash in ‘personal assets’. Number one, the most common asset is your home or rather property that you own. Land and structures on them home are all part and parcel of the same asset. A business is also considered an asset. A car or some kind of vehicle such as a boat is also considered an asset. Investment holdings such as stocks, insurance policies, mutual funds etc, are all considered assets. Warehouse storages, garages and equipment are all assets too.

There seems to be one running theme doesn’t there? An asset usually has the ability to convert it’s sale into cash or rather, it produces more wealth. Property prices rise year-on-year, thus you have an appreciating asset. A negative or loss-making asset has become an oxymoron as the whole point of having assets is for your wealth to increase just by ownership of said asset. Cars are a use to someone. It gets people to work, is enjoyable to drive and might be personally valuable to a collector. Stocks are a piece of the pie. A business that grows pays out to its stockholders so again, you have an asset that accumulates wealth for you.

Assets are a ‘hard wall’

Assets are usually a tangible entity. You can touch a property, you can live in the property. It provides you with a value or betterment to your life. Even if that enjoyment is subjective to the person, it still holds that value to be true. Capital assets are purely bank accounts or rather your cash wealth. Cash wealth on it’s own isn’t so confidence-inspiring. Look at it this way, if a wind came to blow your money away, how would you stop it? The simple answer is, you would protect your money with a wall and keep your capital inside. That’s exactly what assets are for. They give your capital asset worth and back it up. Nations do this for their currencies. Why should someone believe your currency is worth something, after all it’s just paper. Well, gold and other precious metals have been used to back up currencies and provide them with a solid wall of protection.

Look up the ‘Gold Standard’ the ‘Gold Standard’. For the majority of the time human beings have had complex, large and global economies, gold has been the number one material that has backed up FIAT currency. People are reassured that the paper they have in their pocket has a value which if they exchanged would allow them to buy food, water, property and live a comfortable life. This is because a precious metal is vouching for it. Assets have the exact same power for your cash wealth. If you were to go to a bank and ask for a loan, if you didn’t have a property, car, or some kind of asset, the chances of being turned away would be high. Assets, like gold jewelry you buy and sell with Gold Buyers, give you a solid foundation of trust and support personally and for your capital.

The age old asset

Since time immemorial there has been one thing we all recognize as an asset. Jewelry is valuable to us in many different ways. It’s easy to understand why it’s valuable too, even as children we already know to look after a piece of jewelry that we have been given or perhaps found. Silver, gold, platinum, rubies, emeralds, diamonds etc, are all the most sought after kinds of jewelry. Precious metals and precious stones, have an innate shine or gleam to them. These materials have taken millions and millions, sometimes billions of years to form. Since this process takes so long, they are inherently valuable to us because they are things we cannot make.

If you have gold chains, diamond rings, ruby encrusted goblets, silver necklace charms or whatever the case may be, you need to protect these assets with some kind of insurance policy. For knowledge on what kinds of jewelry insurance you should get, look at Morison Insurance Brokers and ready their article carefully. They list all the valid reasons why you would need this kind of insurance policy and for what kind of jewelry. Jewelry is such a versatile asset, that almost any kind of financial institution will accept it as collateral holding. It’s not uncommon for bank loans to be given to people with low capital but who have very valuable jewelry assets.

They age like wine

Assets are the number one priority for people who are looking to retire without relying on a state pension. It’s clear to see that owning a couple properties and renting them out would net you a constant stream of capital flowing in. The properties will need to be kept to a high standard so they retain their value for longer, but that’s easily done. Properties are quite easy to understand and maintain. There are lots of services such as roofing, plumbing, landscaping and interior designers that can repair and update your properties to keep with the times. In this sense, assets have the ability to age like fine wine if you know how to take care of them. As the saying goes, if you take care of it, it will take care of you.

Assets like rare cars also have much the same appeal in terms of longevity. One of the original Ford GT40 cars was sold for $10+ million and a Ferrari GTO for even higher. Classic cars are not just interesting to hold as an asset, but they never seem to run out of buyers. No matter how many generations have moved on since the first day they rolled out of the factories, they are still enthusiastically bought for millions of dollars. There will always be a wealthy class of people that want a rare toy in their garage. That’s why having assets is so important, because the value they return to you is always set to increase year after year.

Create your own buffer zone

If none of the previous reasons have convinced you why you need to be owning assets, here is one last attempt. This one should win you over. When an economic crash ensues, capital all across the world gets slaughtered. Stocks and bonds plummet, currency values drop substantially and any hard cash is worth much, much less than it was just yesterday. Essentially, if all your wealth is in some kind of money hedge or just a lump sum in a bank, then your wealth will be cut down dramatically when an economic crash happens. Recessions all hit the cash flow in the market the same way. Consumer confidence drops, people pull their money out of investments and they go into hibernation to wait out the storm.

Now you may be thinking that assets will also have to fall in price because people aren’t spending as much. However, assets retain a lot more of their value even when there is a recession. This is because at the end of the day, someone will have enough money to buy or utilize your asset for their needs. Crucially, that need or desire is still there no matter what is going on in the economy. People who were saving up to buy a house don’t suddenly stop wanting a house because they lost a lot of money. No, the desire is still there so you have an inherent value in assets even in hard times. In a sense, assets create a buffer zone between you and the recession, they allow you to have more authority in the eyes of banks and governments.

Do not put all your wealth under your mattress so to speak. Put your wealth in asset acquiring. Own property such as a house, land, automobiles, boats and jewelry. When you have hard tangible wealth, your paper wealth is automatically boosted in so many ways.

Challenging Misconceptions and Stereotypes in Class, Household Income, Wealth and Privilege

“It seems to me that in general white people are content to eat soup and sandwiches if it means buying a house. They don’t care as much about of having the latest fashions, and driving the fanciest cars!”

First of all, I hope the opening quote didn’t offend you. It was a part of an actual discussion with my father – one of many, and you’ll see its relevance later on. The first principle of my blog is “Creating Ecosystems of Success” which in short means showing others how to be successful, keeping in mind that what’s considered successful varies from person to person. The second piece I published on the Examiner titled, Challenging misconceptions and stereotypes in academic achievement, revisited one of my earliest lessons about academic success. In short, my father pointed out that academic success was merely a function of priorities and time invested, not the inherent ability or genetics of a particular race – something which helped me become a stronger student later on.

With two other principles of my blog being “The Teaching of Financial Literacy/Wealth Building”, and “Long-term thought”, I’ve crafted a similar piece discussing how our ideas and misconceptions shape our financial lives, and how we see the financial lives and privileges of other ethnic groups/races. Relatively recent data shows that while black families still have half the average median income/net worth of white families, Asian families seem to have caught up to those same white families and have even surpassed them. As a black man myself, I’ve wondered if Black-Americans should look around at all of the other ethnic groups in the United States, as opposed to solely focusing on White-Americans, in terms of financial success and all that comes with it.

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“All of that state and federal money is going to those white folks. The black folks aren’t getting anything.” I’ve heard these and similar discussions frequently growing up during holiday dinners, and even today from my elders in my mother’s generation when discussing current events in my home city of Buffalo, N.Y. For some, Buffalo is a segregated, “non-progressive” city as described in the story of my blog, and it forever shaped the outlook of my mother and her peers.

Actually, many discussions with my father, who is from Harlem, were also peppered with broad brush discussions of “white people”, “them”, or “they” in unflattering ways – usually about the oppression of black people, and white people having unfair competitive advantages in life. The opening quote of this post was from a discussion he and I had about spending habits and race. Are my parents, grandparents, aunts, and uncles racists? No, I don’t think they think black people are superior to other races, but they did experience segregation and Jim Crow causing a residual level pain, a distrust of white people, and arguably some bigotry of their own. Yes, even if only to a small degree, I do think black people can also be bigoted.

In hindsight, we never discussed how or what Arabs, Asians, and Hispanics were doing – only white people. We knew that most of the stores in our neighborhoods were owned by other ethnic groups, but we mostly talked about the, “white folks.” It was a singular focus which compared black and white, mostly talking about black people being disadvantaged and powerless. It seldom, if ever, came up that there were multiple classes of black people – some which were winning in life, had been doing so for a long time, and had some privilege of their own.

There were, in fact, affluent and privileged black people, though my family didn’t affiliate with them much. It wasn’t until I went off to college that I started to see that there were alternate realities. Lawrence Otis Graham’s Our Kind of People: Inside America’s Black Upper-class periodically pops up in my writings. Highly criticized for celebrating America’s black upper-class, it was an important work for me personally because it let those of us who didn’t grow up in that class know that it existed – something as a black person you encounter and must reconcile in cities like Washington, DC, where I now reside. Some of these people were born into the upper class through generational wealth and inheritances, while others climbed there through digging in, sacrificing, and doing some things that other ethnic groups had done – things that were considered in some circles to be “white.” The children of these black families had privileges I didn’t have.

* * *

“The person who wrote this, are they white?” my godson asked me.

As described in my post titled, We should have bought Facebook and Bitcoin Stock, a mentor gave me a copy of the book How to Turn $100 into $1,000,000: Earn, Invest and Save. I started giving copies of the book to the younger people in my circle so that they could have a head start on some of the important concepts I only started learning in my late twenties – “Compounding Interest” for example, covered in Chapter 8. One of the lucky recipients was my godson.

I had just read a passage to him from the end of the book. The subsection was titled, “You made a million dollars? Great. Now Zip it”. The section warned against, “playing the high roller to impress people,” which could, “make you look like a fool” and, “invite theft.” I didn’t anticipate his question, but it was very telling about my godson’s world view – a teachable moment which I’ll return to with him in the future.

After asking him about his question, he told me that the passage I read to him sounded like a, “white way of thinking.” I first told him that it seemed that at 14 years of age, he’d started recognizing that there were differences in the value systems of different ethnic and racial groups – in this instance black people vs. white people. In terms of values, our people are known for frivolously spending their resources, flaunting their wares (many only depreciating) – signaling to one another as described by Dr. Boyce Watkins. I then cautioned my godson that not all white people are wealthy and that some were in fact poor. There were also some black people who were wealthy from things other than athletics and entertainment.

What was my godson growing up seeing in Prince Georges County, Md., the wealthiest black county in the United States? I’ll just say that earlier that day, I watched as many of the people at his house gushed over his blue and white Air Jordans – the ones with the shiny colored toes. They were enamored with name brand sneakers, clothing, and other symbols of money and perceived power – again many which only depreciate in value. I’ll stop there. In short, the values he was experiencing daily didn’t dictate keeping any material prosperity he would achieve quiet as it was a white way of thinking.

* * *

I first thought about Asian-American wealth last year when someone on Twitter shared an infographic stating that Asian-American wealth has steadily grown, while their voter participation had stagnated. The point of the tweet was that while Black-America has been one of the more vocal groups during elections, and in civil rights/social justice arenas, we haven’t significantly closed the wealth gap with White-America (as a group). The implication of the tweet was that black people as a group were focusing on the wrong things.

I found some interesting data in a report by the Pew Research Center titled On Views of Race and Inequality, Blacks and Whites are Worlds Apart. While the report mostly compared black people and white people, it also included some data on Asians and Hispanics. I’ll start with the figure titled “Whites are more likely than blacks to have a college degree”. It showed that 36% more white U.S. adults ages 25 and up had college degrees versus 23% of blacks in 2015. Interestingly 53% of Asians-Americans had college degrees – a greater number than whites.

A subsequent figure titled “Racial gaps in household income persist” showed that in 2015, blacks and Hispanics had median adjusted average household incomes of roughly $43,000. Whites had a median adjusted household income of $71,000, and surprisingly Asian-Americans had a median adjusted household income of $77,900. According to the report, Asian income has been on par or exceeded White income since 1987. Asian-Americans weren’t tracked in the report prior to 1987 so it’s not clear where exactly they started as a group. The gap between blacks and whites has steadily widened since the 1970s.

The figure titled “Blacks are twice as likely as whites to be poor, despite the narrowing of the poverty gap” showed that in 2014 the percentages of blacks and Hispanics in poverty was double that of whites and Asians. The next figure showed that whites have 13-times more wealth (net worth) than blacks in terms of household – $144,200 versus $11,200 for blacks. No data were presented on Asian-Americans. The figure titled “Homeownership is more common among whites than any other racial group” showed that whites led in homeownership, followed by Asians and then Hispanics and then blacks. Further data showed that blacks led in unemployment, versus the other three groups. Lastly blacks led in non-marital births, children under 18 living in single-parent households, and finally declining rates of marriage.

There was an interesting 2014 article from CNBC, written by Hailey Lee titled, How Asian- Americans are transforming the face of U.S. wealth. The article cited data from the Federal Reserve showing that Asian-American wealth had changed dramatically since 1989, growing to 70% of that of whites – $91,440 vs. $134,088. A subsection of the article titled “What came first: Wealth or education?” discussed whether or not the increased attainment of education could account for this gain in wealth.

The article stated that, “In 2013, 73% of Asians aged 35-39 held a degree beyond high school. That percentage was 54% for whites, 36% percent for blacks, and 23% for Hispanics. The disparities grow when looking at individuals with at least a four-year college degree: 65 % (Asian), 42 % (white), 26 % (black), and 16 % (Hispanic).”

In the section titled, “The wealth effect”, the article further stated that, “When Charles Emmons narrowed the data set to examine Asians younger than 62, both levels of median income and median wealth surpassed whites. This implies that younger Asians tend to be financially stronger than older Asians. And older Asians compared to their white counterparts, are weaker financially.”

“There’s a huge population of hardworking, educated Chinese who look to the U.S. for real estate investment,” said Elizabeth Schwartz in the Washington Post’s article titled Wealthy Chinese buyers are a growing force in U.S. real estate markets. “But they come to this market (New York City) not with money to just throw around, but rather to make informed, well-reasoned investment choices.” I looked up this article because I’d heard in recent years that there were lots of foreign investors buying up U.S. real estate in the aftermath of the great recession. One of the most prominent groups being Chinese Nationals whose average home price in 2015 was $831,800 compared with $499,600 for all other international buyers according to the Rosen Consulting Group.

* * *

So, what does all this data mean? First, as Black-Americans our measuring stick is often White- America, but the data out there suggest that the time has come to start looking around and tracking other ethnic groups, and inquiring about how they’ve gotten to where they are in such relatively short periods of time. In my hometown of Buffalo, N.Y for example, on the eastside where I grew up, none of the stores are owned by the black people who live there. The owners are from the Middle East, and they’re able to effectively run their businesses and coordinate with one another – all while growing steadily wealthier.

I didn’t know that Asian-Americans had made such strides in income/wealth. With all of the talk about white wealth and privilege, I thought whites would have been the leaders in these areas. As described in my Challenging Stereotypes and misconceptions post, Asians are perceived as an extremely hardworking group. Malcolm Gladwell dedicated a whole chapter to their work ethic in Outliers. Their attainment of college degrees in comparison to other ethnic groups is noteworthy, but it’s also important to consider what their degrees are in – probably the STEM fields.

They also seem to be very entrepreneurial, and I’m not speaking exclusively about their restaurants. Again, if you look in many black communities you also see an abundance of beauty supply and nail shops. Lastly their spending habits and marital rates are probably also important factors.

In closing, race discrimination, stereotypes and misconceptions are very dangerous in that they can enforce false narratives and world views. Those false narratives and views can lead whole groups of people in the wrong direction over long periods of time, setting them back for generations. Lastly, they can create false targets and goals to emulate and pursue – hence the power of political groups and the media.

Thank you for taking time out to read this blog post. If you’ve enjoyed this post, you might also enjoy:

Challenging misconceptions and stereotypes in academic achievement
Your net worth, gross salary, and what they mean
We should’ve bought Facebook and Bitcoin stock: An investing story
The differences between being cheap and frugal
Mother’s day 2017: One of my mother’s greatest gifts, getting engaged, and avoiding my own personal fiscal cliff
Father’s day 2017: Reflections on some of dad’s money and life lessons

The Big Words LLC Newsletter

For the next phase of my writing journey, I’m starting a monthly newsletter for my writing and video content creation company, the Big Words LLC. In it, I plan to share inspirational words, pieces from this blog and my first blog, and select videos from my four YouTube channels. Finally, I will share updates for my book project The Engineers: A Western New York Basketball Story. Your personal information and privacy will be protected. Click this link and register using the sign-up button at the bottom of the announcement. If there is some issue signing up using the link provided, you can also email me at bwllcnl@gmail.com . Best Regards.

Your Net Worth, Your Gross Salary, and What They Mean

“The interesting thing about one’s net worth is that it can’t be negotiated with one’s employer.”

Note.  The subject matter of this blog post is not new.  It has been known for years by those who learned about it in their families, or who have discovered it on their own.  It’s simply a discussion from my personal perspective which I think is worth visiting.  The pictures displayed throughout this post are from the eastside of my hometown of Buffalo, NY.  My first money lessons started there – a lot of what not to do, and they capture the essence of some of the money challenges facing my brothers and sisters in my hometown and across the country.

Money Lessons From Your Family

Life is literally a lottery and regardless of your color or nationality, one of its immutable truths is that you can’t control the family you were born into.  You can’t control the parents you are born to, which likewise dictate the privileges and advantages you have access to.  We often think of privilege in terms of black and white (White Privilege), but there are also black families that have privileges over other black families.  The family you are born into in large part guides your start in life, the information, and the values that will dictate your early life choices – good or bad, though they don’t necessarily shape all that comes afterwards – a good thing for some.

Neither of my parents talked about what a Net Worth was when I was growing up.  As described in the Big Words Blog Site Story, my mother and her siblings were first generation college students – descendants of parents who were a part of the Great Migration.  My father’s situation was similar.  They were children of the Civil Rights Era, and thus the big goal for them was earning college degrees and then securing stable jobs on equal footing with their white peers.  That for them was winning and it was also a surpassing of their elders.  For those of us born from their generation (Generation X), going to college was also expected, but what would be the next level for us?  What was winning for our generation?

One’s Gross Income Vs. Their Net Worth

These days I have a lot of discussions with via text messaging with my brother Amahl, and three close friends from Hutch-Tech High School in Buffalo, NY: the twins Alim and Raheem Gaines and our other buddy, Hestin Brown.  All week long we discuss topics including sports, politics, and some of the silly stuff we see in the media, on Black Twitter and on Facebook.  We discuss social issues as well, particularly as they relate to the black community.  We’re a “Black Male’s Support Group”, or even our own little “Think Tank”.  Recently in a group dialogue that started out with a controversy regarding Tyrese Gibson’s spouse and whether she was actually black, something else much more important came up, the concept of one’s net worth.

Alim cited something he heard about listing what black men in the United States earn in terms of average gross income.  I responded wondering what the breakdown was for black women and Alim on cue cited the 2010 study by Mariko Chang describing Black and Hispanic women having average net worths of only $100 and $120.  I quickly pointed out that there was a difference between one’s gross income and their net worth.  My brother, the eldest in our group, asked what a net worth was.  For perspective, we’re all just above the age of 40.  Alim and I both knew the answer and gave it.  I shared that I was first introduced to the term in my late 20s, but didn’t completely grasp it until my mid-30s – very, very late in the game.  I pondered the fact that my brother still hadn’t grasped it yet – not a knock on him by any means, just our life’s circumstance.  I then wondered how our own life decisions would have been different had we known this important concept in our teens.

What Is Your Net Worth?

Just briefly, your net worth is the numerical difference between what you own and what you owe – your savings and your assets minus your debts and obligations (liabilities).  Your savings are self-explanatory – the amount of liquid cash you have available and can access quickly.  Assets can be anything from securities such as stocks, gold or silver, real estate investments, equity in your home, or profitable businesses.  If you’re an employee, a major contributor to your net worth is your retirement savings – that’s if you’ve been disciplined enough (and able) to steadily set money aside, which is something that the experts at Horan Wealth Estate Planning can help you with.  Debts/liabilities are self-explanatory as well.  Common forms of debt are: credit cards, car notes, mortgages, home equity lines of credit, loans against your retirement savings, etc.

I only started learning about what a net worth was in my late 20s, out of curiosity and chance.  Books like the Rich Dad Poor Dad talked about it, in addition to the Millionaire Next Door.  In Dave Ramsey’s Financial Peace University (FPU), the term is not explicitly addressed, but FPU’s ‘Baby Steps’ ultimately lead to a steadily increasing net worth.

A Metric Of Your Wealth

Okay, so what’s the big deal about this somewhat abstract and nebulous term that only few understand?  The answer is that your net worth is a metric of your wealth which is very, very different than your gross salary.  This is a critical distinction because a high gross salary doesn’t necessarily translate into a high net worth.  A person or a couple can have high gross salaries and still have a negative net worth(s).

In Black America we’re often enamored and impressed with individuals who make six figures.  Similar to one’s occupation, making six figures by itself can be deceptive.  You would assume that a medical doctor, a lawyer, or a news anchor would be very comfortable, but not necessarily – the same is true for someone who makes six figures.  Imagine if a person has a gross salary of $100,000 and their expenses are $95,000.  They’re still essentially broke right?  Beyond a certain point, your gross income is what Malcolm Gladwell in his book, Outliers, calls an ‘Entrance Criteria’ – an attribute that allows you entry into a club, though it isn’t a predictor of greatness.  ‘Excellence Criteria’ is what separates the great from the average and the underachievers.  These are the things that allow one to become wealthy in this case.

Contrary to the images we’re bombarded with in the media, the excellence criteria for building your net worth don’t necessarily involve a lavish and high consumption lifestyle, but instead being frugal and careful with one’s money.  Dr. Thomas Stanley wrote extensively about this in his Millionaire Next Door series.  This means that many people are chasing after the wrong things in life and not knowing it until it’s too late.

Increasing Or Decreasing Your Net Worth

What are some keys to growing your Net Worth?  Some of them include:

  • Budgeting one’s money and controlling costs – learning to run a surplus vs. a deficit;
  • Saving money gradually in an emergency fund, retirement and then potentially for investments and;
  • Carrying the least amount of debt possible.

What are some keys to keeping and maintaining a low/negative net worth?  Some of them include:

  • Spending more than you earn – spending everything you earn;
  • Not saving anything and;
  • Carrying large amounts of debt – particularly on the things that lose value or don’t justify borrowing the money – cars, sneakers, and degrees which don’t lead to well-paying jobs.

In his Rich Dad Poor Dad series, Robert Kiyosaki actually defines wealth as the amount of time one can go without working while still being able to cover expenses.

But what are the greater implications of growing your net worth and wealth?  They can position you to do things like build businesses.  They can be used to donate to charities, and to give other students, for example, the chance to go to school to better themselves – something sorely needed in Black America.  This is the importance of organizations like the United Negro College Fund for example.  They can be used to fund political candidates and campaigns, and have a true seat at the table when national and local policy decisions are made.  At the end of the day, politics is all about money right?

In Black America right now discussions, like the ones my buddies and I have, are actually taking place about the differences between having a high net worth and having a high salary – again two things which don’t necessarily correlate.  One gentleman on Twitter, a Nigerian I think, who regularly beats the net worth drum often rebutting people who think they’ve made it because they’ve attained a high gross salary and have luxury items like Mercedes Benzes and BMWs.  While these are prestigious toys, they gradually lose value and deceptively don’t translate into wealth.

Can You Negotiate Your Net Worth With Your Employer?

The interesting thing about one’s net worth is that it can’t be negotiated with one’s employer – it’s something that must be decided and acted upon by the individual once they understand it – like choosing to eat healthy or choosing to continue to eat an unhealthy diet.  It can’t be legislated or forced upon groups of people, nor should it be.  It’s a personal choice just like practicing a religion or choosing a spouse.  Speaking of which, I’ve read that judges actually consider a couple’s net worth during divorces and usually just split everything down the middle – a source of tension particularly when one of the spouses hasn’t earned the assets being split.

“Tasha and Ron are living large.  She’s a School Administrator and he’s a Fireman,” my mother said about couple in their 40s who are friends of the family.  She was looking at their professions and what she thought their salaries were and concluded that they were winning financially.

“Actually you don’t know that, Mom,” I said in reply.  “People can look like they’re making it on the outside, but without knowing their savings, their bills and their debts are, you don’t really know how they’re doing.”  My response echoed Robert Kiyosaki’s books where he stated that an individual’s financial success is actually dictated by their income statement and balance sheet – two things you can’t see by looking at someone – but things banks weight highly when qualifying individuals for mortgages or business loans.

What prevents individuals from growing their net worths?  Several things actually.  One is ignorance.  If no one ever tells you about it and you don’t stumble upon the information, you’ll never know.  Secondly, personal choices prevent one from doing it.  It takes discipline and drive, and many individuals lack those.  As a man, if you’ve recklessly had a bunch of kids and are bogged down with child support payments, you’ll probably never get there.

If you’re a single mother also with many kids, you’ll also have a hard time getting there as well.  It’s not impossible, just exponentially more difficult.  In one of his videos, Dr. Boyce Watkins stated that the average cost of a child is $250,000 up until it turns 18 years of age.  The other piece is that in some instances, particularly in Black America, only a handful of people in a given family get educated and earn a decent salary.  Those individuals are often looked upon to take care of everyone else – a potential, “Siphoning off of the wealth,” as Dr. Michael Eric Dyson said, partially joking, at the 2015 Congressional Black Caucus Annual Legislative Conference.  That day he was leading a Wealth-Building panel.

Who Can Become A High Net Worth Individual?

Growing a high net worth doesn’t necessarily involve going to get a Ph.D., an M.D., a Pharm D., or a J.D.  You actually don’t necessarily need a college degree to do it.  It simply requires a steady stream of income, understanding debt, and priorities.  This is what Dave Ramsey meant when he said, “Money is 20% knowledge and 80% behavior.” 

This is also one of the key principles in Robert Kiyosaki’s Cashflow game where players must choose their profession before playing.  One would think in the game that it would be easier to get out of the “Rat Race” by being one of the higher income professionals like the doctor, lawyer, or the airline pilot, but it’s actually easier as the web designer or the janitor.  While they generate less gross income, they also carry less debt and have fewer bills.  Their cost per child is also less than the higher income professionals.

Understanding what a net worth is and then making the decisions to grow it is a paradigm shift and a powerful one.  As with most things, we all have lives and everyone’s situations are unique.  We all have relatives and friends who may not necessarily understand the decisions and temporary sacrifices being made, and thus it’s important to know your own motivations – you have to know your ‘why’.

Concluding Thoughts

Again, a net worth is not a salary that you make every year.  It’s a result of spending habits and specific money choices.  How often should it be calculated?  One of my mentors told me that it should be calculated quarterly.  If you haven’t been paying attention to it, your initial assessment may not look pretty, but it gives you a place to start from – kind of like a doctor’s checkup.

So what’s your net worth?  Don’t answer that.  From experience, just like your gross income, it’s best if you keep it to yourself and only share it with a trusted few if anyone at all.  Money does different things to different people, and when people think you have it, it can do strange things to your relationships – your relatives and friends.

Thank you for taking the time to read this post. If you enjoyed this post, you might also enjoy:

The difference between being cheap and frugal
We should’ve bought Facebook and Bitcoin stock: An investing story
Challenging misconceptions and stereotypes in class, household income, wealth and privilege
What are your plans for your tax cut? Thoughts on what can be done with heavier paychecks and paying less tax
Who will have the skills to benefit from Apple’s $350 billion investment?
Mother’s Day 2017: One of my mother’s greatest gifts, getting engaged, and avoiding my own personal fiscal cliff

If you’ve found value here and think it would benefit others, please share it and or leave comments.  To receive all of the most up to date content from the Big Words Blog Site, subscribe using the box in the right-hand column in this post and throughout the site, or add the link to my RSS feed to your feedreader.  Please visit my YouTube channel entitled, Big Discussions76. Lastly follow me on Twitter at @BWArePowerful, on the Big Words Blog Site Facebook page, and on Instagram at @anwaryusef76.  While my main areas of focus are Education, STEM, and Financial Literacy, there other blogs/sites I endorse which found on that particular page of my site.