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Income
Taxes
Property
Net Worth
Rich ( High Income ) vs Wealthy ( Sustainable financial health without work dependencies - follow AMSGPSL steps )
On the other hand, being “wealthy” signifies longevity, resilience and a kind of financial freedom, experts said.
“Financial freedom means you have the ability to say no to anything you want, and to say yes to anything you want,” Echaniz said. “You’re not beholden to employers or to interest-rate changes. You’ve set yourself up in a way that there’s no obstacle you can’t overcome, and there’s no person you can’t say no or yes to.”
Not an annual view but a sustainable, generational view of financial health
Manage expectations, expenses, live style, spending for higher life style value
Example of wealth based on sustainable life style with financial health that doesn't require labor
You don’t need to be in the top 1% of earners — or even the top 10% — to achieve the freedom and stability that characterize wealth, experts said. Sullivan pointed to a family member of his, a former schoolteacher who was saved prudently for retirement during her career. She lives in a two-bedroom condo and drives an average-priced car, but is able to take frequent trips to Europe and to visit her grandchildren.
“She is wealthy,” he said. “She is able to make the choices she wants to make in her life.”
What retired people wish they had done earlier
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10 Steps to Financial Security Before Age 30 pdf
1. Track Your Spending
A free budgeting app like Mint can help you do this.
2. Live Within Your Means
Keep your standard of living below what your earnings can accommodate
3. Don't Borrow to Finance a Lifestyle
Borrowed money should be used when your gain will outrun your borrowing costs. This might mean investing in yourself—for your education, to start a business, or to buy a house.
4. Set Short-Term Goals
set a series of small short-term goals that are both measurable and precise—for example, paying off credit card debt within a year or contributing to a retirement plan with a set contribution each month
5. Become Financially Literate
Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life. Making sound financial and investment decisions is important for achieving your financial goals.
6. Save What You Can for Retirement
Try setting up automatic monthly contributions to a retirement plan, such as an employer-sponsored 401(k) if you have access to one, or an IRA if you don't. You can increase your contributions when your income rises or when you've achieved more of your short-term goals.
7. Don't Leave Money on the Table
If you work for a company that offers a 401(k), make sure to contribute at least up to the maximum of what your employer will match, otherwise you are leaving money on the table. In addition, you can deduct your contributions in the year you make them, which lowers your taxable income for the year.1
8. Take Calculated Risks
Examples of calculated risks include:
- Moving to a new city with more job opportunities
- Going back to school for additional training
- Taking a new job at a different company for less pay but more upside potential
- Investing in high risk/high return stocks
9. Invest in Yourself
Look at yourself as a financial asset. Investing in yourself will pay off in the future. Your skills, knowledge, and experience are the biggest assets you have. Increase your value by continually upgrading your skills and knowledge and by making smart career choices.
10. Find the Right Balance
Striking a proper balance between your life today and the future is also important. Financially, we can't live as if today is our last day. We have to decide between what we spend today versus what we spend in the future. For example, set a short-term goal to save for a trip to a destination you've always wanted to see instead of using a credit card to finance it. Finding the correct balance is an important step toward achieving financial security.
11. Generally avoid credit card loans
You should ALWAYS pay off credit card debt monthly to avoid the finance charges that can legally run up to 30%
KEY TAKEAWAYS
- Knowing how much you spend can keep spending in check.
- Live within your means, don’t use credit to fund a lifestyle, and set short-term achievable financial goals.
- Become financially literate and save what you can for retirement.
- Take calculated risks, such as moving to a city with more job opportunities or taking on a new job that pays less but has more upside potential.
- Invest in yourself by continually upgrading your skills and knowledge.
- Strike a balance—working toward financial security doesn’t mean you need to deprive yourself.
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