The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.
Today, it seems that everyone’s ambition is to go on expensive trips, acquire a bunch of stuff, and live in a huge house. After all, that’s what our friends and family are doing as well.
But, is this really the best way to live? Is this the way to wealth? If you ask me, I say certainly not!
The Road to True Wealth
For those that measure wealth with their stuff, they will likely have a bunch of toys, but will always be worried about paying all the bills when the end of the month comes. This should be obvious to you that this is not the road to true wealth.
So what does wealth really mean? It comes as a surprise to many, but wealth is not just measured in dollars, but is also measured in time and relationships. But, without first taking care of the dollars side, the two other areas of wealth can be difficult to attain. For example, I know of a few doctors that have million dollar houses and nice cars in the driveway, but in order to fund their lifestyle they must continue to work their butts off, day in and day out. By spending all of their time at work, they clearly aren’t enjoying a wealthy lifestyle of extra time. And, their relationships with their spouse, kids, and friends probably aren’t the best either.
So how can someone become truly wealthy, with money, time, and great relationships? Well, in order to have true wealth, it is often best to start by getting your finances in order.
Fixing Your Financials – 7 Steps
It’s pretty hard for me to hide, and you probably suspected this already, but I am a huge Dave Ramsey fan. On his site and in many of his books, he mentions seven steps to becoming getting out of debt and becoming rich, and I have not found any major holes in his teaching yet. In order to increase your cash flow situation, one should follow the below seven steps:
1) Set up a $1,000 Emergency Fund
2) Pay off all consumer debt with the snowball method
3) Save up a large emergency fund with 3-6 months of expenses
4) Put 15% of your income into investments
5) Save up for your children’s education
6) Pay off your mortgage
7) Become rich
I have personally gone through all seven steps of this plan and it flat out works to become rich! But, as we have discussed before, the financial aspect is only a portion of what it takes to be truly wealthy.
Building Relationships and Freeing Up Time
Money without time or friends is a pretty huge bummer and doesn’t qualify as a wealthy lifestyle in my book. Money should be earned in order to grow a more passive income – either with the stock market or with a side business. By forgoing an immediate possession or two (which will only hurt your net worth as it drops in value), your money can grow even more money, which will allow you to decrease your work without sacrificing a sizable income. With this mentality, time can be freed up, which will then add to your overall wealth.
The relationship side of the equation is a little more difficult because we are not all blessed with the gift of communication. And honestly, some of us think that a life in the woods away from people might be more fitting for us. But, we were not created to be hermits. Instead, we were meant to befriend and love others, to be selfless and give of ourselves. And somehow, this adds to our happiness and wealth in this world (I can’t explain it, but personal experience proves this to be true).
So what do you think the main ingredient of relationships is? You got it: giving. It may seem oxymoronic, but in order to be truly wealthy, we must learn how to give, both financially and physically. By giving of ourselves and our blessings, others may benefit and reciprocate that gift either back to you or to someone else. And, when you take your focus off of yourself for just one minute you can begin to understand how much you really have to be thankful for.
How about you all? What do you think about this equation for wealth? Do you agree with it?
Share your experiences by commenting below!Â
***Photo courtesy of https://www.flickr.com/photos/42931449@N07/5299199423/
