11 nuggets of wealth-building wisdom

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11 nuggets of wealth-building wisdom
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Clark’s message of ‘save more, spend less and avoid ripoffs’ is all about empowerment. He wants you to take charge and take control of your life; one dime at a time, one dollar at a time and one day at a time.  

Sometimes things happen that are out of our control. Most of the time, though, it’s the choices we make—both little and big choices—that make the difference in what control we have over our lives and our future.

It’s been said that the best way to learn this lesson is to hear it in the words of other people. Today, we present several voices of financially empowered people culled from a Kiplinger article ‘7 Habits of Highly Frugal People‘ (done in the style of Stephen Covey’s seminal book 7 Habits of Highly Effective People) and a Forbes article titled ‘11 Superstar Savers Offer Their Wisdom For Building Wealth.’


Be proactive

This is like saying, ‘You’ve got to be in it to win it.’ Strive to have a handle on your money. Budgeting is a great way to get started. So grab your smartphone and get ready. These apps will help you budget like a boss!

Read more: 8 simple things you can do today that will make you richer

Join a buy nothing group

“Start with a week of no spending, or a month. Once you start, you’ll recognize where those temptations are for you.”

 — Geoffrey Szuszkiewicz and Julie Phillips

Our contributor Katy Wolk-Stanley recently reported on groups cropping up all over the world where members both give and receive so they don’t have to shell out for anything. These so-called ‘Buy Nothing’ groups are amazing for redistributing the excess in our homes to people who can actually use our stuff. For example, Katy recently went this route to score a MacBook computer charger after hers went kaput, which saved her a cool $79. Click here to find (or start) a Buy Nothing group in your area.

Begin with the end in mind

This one is powerful. It recognizes that the end game is not necessarily to pinch a buck; it’s to have the freedom to make choices—freedom to save, invest and do as you wish. When you start financial planning with the idea of retiring early, you have a tangible goal to work toward—and a goal can make all the difference.

Figure out the ‘Big Why’ of your money

“Saying ‘I want to save 20%’ doesn’t mean anything. Why do you want to save money?”

— Cait Flanders

Most folks do what they’re “supposed to do,” as our staffer and contributor Joel Larsgaard once wrote. They drive a reliable two-year-old car. They purchase a 4BR/2.5B home about 40 minutes from where they work. They hate their commute every day. There’s a 52-inch TV on the wall of their living room. And a few other flat screens scattered elsewhere. And they’re all obviously hooked up to an expensive monthly TV service.

This is the “stock lifestyle” and it doesn’t take into account what people really want out of life: Call it your ‘Big Why.’ If you figure out your ‘Big Why’ of money, you can allocate your funds in the best ways for you and your family. Not sure what your ‘Big Why’ is? You can find out in three simple steps.

Put first things first

You’ve probably heard it before: Pay yourself first. It can seem like a platitude, but if you don’t do it, you’ll find your financial life gets frittered away by all the details and demands of the world. Aim to automate your savings, so the money leaves before you even see it.

Choose your passive income source carefully

“I figured out quite early being a landlord wasn’t for me. It’s a second job if you have bad tenants.”

— FrugalTrader

When people talk about passive income, one common trope you hear is ‘be a landlord.’ Contributor Paula Pant has advocated for that. But the thing is, being a landlord isn’t for everybody. Deacon Hayes, another one of our contributors, suggests dividend-paying stocks instead. ‘Time-honored dividend-paying companies have done well at building wealth and providing an income for many passive income investors,’ he writes. ‘If you want to trade those stocks at zero commission, check out the Robin Hood app.’

Think win-win

We’ve all heard it before: You get what you pay for. That is the exact opposite of win-win thinking! Put in a frugal context, win-win means you cook at home so you save money and eat healthier at the same time. Or you buy a smaller house and save upfront with a lower purchase price and you also save every year with lower costs to heat, cool and clean your home!

Live on less than you make

“From the day we got married, we treated her income as though it never existed.”

— Ninja

When you have a two-income household, it’s a great idea to live on one person’s income and save the other person’s. Maybe that’s not possible for everyone, but it is something to aspire towards. The bottom-line is this: If you don’t live on less than you make, it’s very difficult to take other steps toward financial empowerment.

Clark started his first IRA when he was 19. The contribution limit was around just $1,000 back then. Then when he had his first job out of grad school, he lived on every other paycheck. You don’t have to be as extreme as Clark when it comes to saving. Just do something! The earlier you start, the more powerful your money becomes down the road.

Read more: 2 reasons to never use a debit card at a gas station

Seek first to understand, then be understood

Less is more, right? If you’re on a constant treadmill of working to acquire more and more stuff, chances are you’re not very happy. Understanding needs vs. wants is the key to getting your budget in shape. The world may call you crazy for being frugal. You may be misunderstood and discouraged from your pursuit. But only you can decide if the lifestyle is right for you or not!

Synergize

Cutting back on expenses like cable TV, costly lattes or other myriad money-suckers is great. But did you know that the impact goes beyond just today’s or tomorrow’s budget? It can have a sizeable impact down the road. That’s because every dollar saved today also helps you need less to retire on because that bill is gone from your life forever. That’s the power of synergy.

Or put in reverse, the idea works like this: For every $1 spent, you’ll need $300 more in retirement!

Sharpen your saw

Simply put, this means keep learning. There’s a wealth of info from Clark and a host of other consumer and life-management gurus out there. Jon Acuff is just one who’s recently come on our radar here at clark.com. Never stop learning!


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Theo Thimou About the author: Theo Thimou
Theo is director of content for clark.com. He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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