These Money Principles Will Help You Build Wealth - Money Tip Tuesday

When it comes to your finances, it takes some time to learn the proper lessons to achieve financial goals. With the right mindset and understanding you can use the money you earn to build wealth and eventually reach financial independence. 

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Transcript:

Welcome to Money Tip Tuesday from the Making Money Personal podcast. 

For anyone looking to be financially independent, it’s critical to understand some fundamental financial principles to follow that can help you get there.  

Although everyone’s financial road map is a little different because goals and experiences are different, there are some financial principles that can help you build wealth over time and achieve financial independence. 

1. Pay Yourself First (save early, save often)
   Why are you working and earning money? Is it to make yourself wealthy or to make someone else wealthy? The fact is that when you bring in money, yes, you’re getting paid, but if you don’t keep any for yourself because you spend it all then you didn’t build any wealth for your future. Whenever you pay money to anyone else, whether it’s an item you buy at the store, or money spent for a vacation, you’re not contributing to making yourself fiscally rich, you’re contributing to making someone else rich. 
   This is why budgeting is so important. It ensures you’ll have enough money to pay for the necessities of life, some for your enjoyment and well-being, but also putting some aside for yourself. Try to set some of your money aside for saving in a regular savings account, CD, Money Market or investment account over time. As it accumulates, you’ll be building wealth for yourself. 
    
2. Consider the true value of what you buy
   Everything you buy has a value to it that is more than just the price you pay for it. Some things hold value for a long time and even go up in value, while other things depreciate, sometimes so fast, you’re buying a new one within the next two months. 
   Being an informed shopper will help you determine whether the higher quality, more expensive item is worth the purchase, or if the cheapest item is the way to go. 
   Some key factors to consider when purchasing are as follows: the cost – how much will you pay for it. The quality – what are the materials and are they long lasting or more disposable. The usefulness – how does this item affect my immediate and future needs. The lifespan – How long will this item last? 
   There are many instances where buying the cheapest item is the most economical way to go. But remember that for many things in life, you get what you pay for. Understanding the cost and value of the items you purchase will help you make an informed spending decision and avoid wasting money. 
   
   
3. Understand what credit IS and ISN’T
   Remember credit is NOT your money, nor is it your wealth. Credit is the ability to borrow money to buy something now, with the agreement that it’ll be paid back later. 
   But, many people forget that their credit limit and lines aren’t the same as having cash in the bank. Every cent on the credit balance needs to be repaid. Using credit isn’t a bad thing, since many people use credit lines for emergency purposes or to get cash back and other rewards programs for purchases. The danger lies in the thinking that credit is your cash and thereby the temptation to overspend is great.
   If you manage your credit cards correctly, by paying your balance every month, then you can use your credit for beneficial purposes. Credit is a useful tool that can give you a lot of buying power, but it needs to be treated with respect and care.  
   
   
4. Be Patient
   Our impatience holds a large influence over our spending tendencies. It also impacts our trajectory towards financial independence. As the saying goes, Rome wasn’t built in a day, and the absolutely applies to building wealth. Don’t expect to be at the finish line the day you start the race. It will take careful planning and time to get to your destination. You need the motivation to begin, but the endurance to continue. 
   Impatience can sabotage even the most well-conceived plan because along this journey you’ll get tired, feel like you’re not making progress, and sometimes consider giving up, but don’t. Understand that this is a process and with consistent, steady action, you’ll build wealth and achieve your financial goals. 

If there are any other tips or topics you'd like us to cover, let us know at tcupodcast@trianglecu.org, and don't forget to like and follow our Making Money Personal FB page and look for our sponsor, Triangle Credit Union, on Instagram and LinkedIn to share your thoughts.   

Thanks for listening to today's Money Tip Tuesday. Check out our other tips and episodes on the Making Money Personal podcast.   

Have a great day!