How do you define wealth? Do you think it is “a large amount of money and possessions”? If so, consider this definition instead: wealth is the financial security that comes from managing your money wisely. When you think of wealth in this way, you have the power to be wealthy!
Most of us want to be rich because we think it’ll make our financial problems will go away. Sadly, research shows that people who suddenly come into large sums of money, like lottery winners, are more likely than average Americans to declare bankruptcy within 3 to 5 years.
Why does this happen? The problem is a lack of basic financial skills: If you don’t know how to manage money, it won’t matter how much you have. Your habits are what contribute to financial success or failure. When people without those skills suddenly come into more money, they often increase their spending. They haven’t learned the financial restraint needed to keep and, most importantly, grow their money.
Being rich means you have money. Being wealthy means you know how to hold on to money and make it work for you. The good news is that if you earn a living wage, you can change your financial habits and create personal wealth. Focus your spending on needs (housing, groceries, retirement savings, etc.) rather than wants (a new sports car, expensive jewelry, etc.). Spend wisely rather than carelessly. Start a savings account if you haven’t done so yet, and then acquire assets with the money you save, like investment accounts and retirement plans. These will provide you with long-term financial stability.
By curbing your spending even just a little, you can begin to develop personal wealth and habits that will stick with you as your income increases. The best place to start your journey is with a budget. Visit practicalmoneyskills.com to take a quick budget quiz, learn budgeting basics, access budgeting calculators and more.
If you’re looking for a more personalized approach to managing your finances, contact Public Service Credit Union at 260-432-3433 to schedule an appointment. We have employees who can meet with you to review your debts, help you create a budget, and identify ways you can start saving money.