Wealth Accumulation Blob - BudgetingFaithfully.com

Wealth Accumulation

Let’s start with what is wealth? Wealth is making money, owning property, and having business ventures that create income and or value.  To be honest I never really thought much about my wealth until a friend shared an app that calculates net worth. I thought net worth was for the super-rich.  I know because I Google their net worths regularly.  Besides, I was working my grind to get out of debt and working on fully funding my emergency fund. Once that was done, I moved on to investing and paying off the house. I did not have my focus on wealth accumulation.

However, our wealth was accumulating.  It currently consists primarily of our 401k Plans and rollover funds in investment properties. We have always decided to invest in our company’s 401k programs.  Whenever we experienced job loss we never took the money and ran.  We called our financial advisor and reinvested the money.  We never treated it as found money to splurge with or to use for paying bills.  Having a fully-funded emergency fund affords us this luxury.

Wealth - BudgetingFaithfully.com

That is because we always recognized how important it would be to continue to invest in our retirement future.  Especially when we are constantly bombarded with the fact that social security is not guaranteed money. However, this is not exactly true.  As long as workers and employees pay payroll taxes, Social Security will not run out of money Per AARP.  However, we are not taking in chances so we elected to invest.

Wealth Accumulation And Net Worth

What is your net worth? All your debt minus all your assets.  Your debt is credit cards and loans, what you owe.  Your assets are your money on hand in checking, savings, investments, Real Estate – Primary Home and Business Ventures – Real Estate and other business ventures. The type of investments that generate income and or value. Accumulating wealth helps to increase your net worth over time.  Debt on the other hand decreases your net worth. 

By the time we set down and reviewed the net worth we were pleasantly surprised.  We actually have a net worth!  Nothing like the super-stars but a net worth nevertheless.  Using the app helped us gauge where we were financially and where we still needed to improve.  Paying off the house and increasing our investment percentage based on our current income.  We are currently in future retirement mode so we want to invest the maximum amount we are able based on our current budget.

Worth - Budgetingfaithfully.com

There are currently over 18 million millionaires in the united states per Wikipedia. We would love to be one of them hopefully by the time we are ready to retire.  We have a strong retirement plan.

Wealth Accumulation Plan

A wealth accumulation plan starts with a budget that allows you to eliminate debt so that you will have more money to save and invest. Debt is the number one single barrier to wealth accumulation.  It drains your current income and your future income.  Eliminating debt should be everyone’s priority.  Next, is saving until you have a fully-funded emergency fund.  These funds are not for investing.  They must remain liquid, so have easy access in case of any emergency.

Nearly two-thirds of investors (63%) with no emergency fund said they have or planned to sock away savings for the unexpected because of the health care crisis, according to an Ameriprise Financial survey cited in yahoo! money

Then start accumulating wealth by investing your money.  Make your money work harder than you do. Hence, the more you invest the more wealth you can accumulate.

Investing for Wealth Accumulation

Investing and saving is how you acquire wealth.  One way is by investing in retirement programs.  This is long-term high-stakes saving.  Saving thru investing – The big compounding payoff.  This is not a get-rich-quick scheme this is long-term. Where your money compounds interest over 10, 20, or 30 years. Compounding interest should be your new long-term friend. 

Here Is What Long Term Investing Looks Like  

Start with your companies 401k -max it out.  I took this advice from Dave Ramsey and it has been very successful for my family and me.  Even if they offer a matching percentage look to invest up to 15%.  At least, 15% of your income should always be set aside as your retirement saving goal. It took us a while to get here.  Adding more and more with each raise and a larger percentage once all our debt was paid off. Please note there is a yearly cap on what you can invest.  401(k) contribution limit increases to $19,500 for 2020; catch-up limit rises to $6,500 per the IRS.  Please note this can change from year to year. Seek the help of a financial advisor before investing.  We have had our advisor review all of our 401k plans.

Seeking a professional advisor to discuss additional investment products such as Traditional and Roth IRAs, Annuities, other financial products. We have done this time and time again.  We truly believe in investing and accumulating wealth.

Here Is An Example Of How Compounding Interest Works

If you invest $100 a month for 47 years you will have $445,559 versus $56,500 if you saved that same $100 a month in a jar. Huge difference here.  My son’s teacher shared this information with him when he was in High School.  I told him this was great but life has a way of happening and we can be easily sidetracked.  However, I tried my best to stay on track.  It was not always easy with kids, job loss, and unexpected expenses. But we persevered and stayed true to our budgeting goals.

Here is an investment calculator for you to play around with from investor.gov  

Please note the monies invested in stock, mutual funds, or bonds are not guaranteed by the FDIC.  You can lose all or part of the money.  Investing is not short-term.  Money is made over long periods to absorb the ups and downs of the market. There are always risk associated with investing money. Consult a financial advisor regarding your risk tolerance.

How To Track Your Net Worth?

Here is a Net Worth Calculator for you to see where you are from nerdwallet. This one is down and dirty.  If you want a more comprehensive calculator where you can enter your actual financial accounts I suggest PersonalCapital.com. These are great tools to explore the possibilities. An excellent way to see where your finances currently stand.  To see how far off or on target you are for your retirement or investment goals.  However, if you are not where you need or want to be in wealth accumulation it is never too late to set new goals or update current goals.

Wealth Accumulation And Retirement

Wealth accumulation is directly tied to a secure retirement. After you have been investing for 10 to 20 years you will hopefully be able to retire at your desired time or even earlier. Also, some subscribe to the FIRE movement. The Financially Independent Retire Early group. This group of Millennials lives on a very tight budget, saving and investing most of their money so that they can retire no later than 50.

Anyway, if this is not you and you want to gauge where you are in terms of your age group for retirement.  Here is a retirement savings planner from Ally Bank.  This is a quick way to calculate where you are in the retirement readiness arena compared to others at your age.

Finally, you may want to leave a legacy of wealth in the form of an inheritance to your loved ones.  You can’t take it with you so if you cannot spend it all why not leave some to help others get a jump start on their finances. You can also be a blessing to others in financial need.     

Why Is Creating Wealth Important?

I want to no longer have to worry about money. Emergencies are no longer emergencies but inconveniences that you are relieved to be able to take care of. Dave Ramsey refers to emergencies as no longer allowing Murphy (as in Murphy’s law) to reside in your home.  You no longer have to worry about how to pay your bills, because you have wealth.  The hard work has been done.  We have eliminated your debt.  Living paycheck to paycheck is a thing of the past.  You have savings and are creating wealth with your extra money.  Therefore, you are now able to help those in need. Help your grandchildren with college or leave funds for your family.

Is Wealth Important In Our Daily Life?

Not day to day living. Your budget takes care of day-to-day needs.  Your emergency fund takes care of the unexpected.  Accumulated wealth takes care of your future needs.  Hence, that is why debt is counterproductive to building wealth. Debt is one of the main things that decrease net worth besides loss of income.   

I wish they would teach this in school.  There is no telling how far along in our finances we would all be if we were given a road map.  Financial literacy is the root of the current financial situations for most.  I and many others cannot express the importance of maintaining a budget.  A budget maps out how we plan to spend and save our money.  Without this most end up in debt and living check to check.  So let’s all take control of our money and accumulate wealth.

Recap For Accumulating Wealth

1. Create A Budget

2. Pay Off Debt

3. Fully Fund Your Emergency Fund

4. Seek Advice From A Financial Advisor

5. Invest in Your 401k Plan Up To 15%

6. Explore Traditional And Roth IRAs

7. Calculate And Track Your Net Worth

8. Set Goals For Your Wealth Accumulation

You may also like to read:

Setting Up A Budget For Beginners

Emergency Fund Savings

Being Financially Sound

Why Can’t I Save Money: 10 Reasons You Can’t Save Money

Let’s Budget Spend and live!

Sabrina

Dishonest money dwindles away, but whoever gathers money little by little makes it grow.

Proverbs 13:11 NIV

29 thoughts on “Wealth Accumulation”

    1. sabrinaanthony.media

      They don’t really make it easy for the average person to understand. If they would only teach financial literacy in school. Thanks for sharing.

  1. These are great guidelines for building wealth. While it takes some strategy and effort (and sacrifice) now, it will be so nice in coming years to know you’ve got enough at retirement!

  2. Such an informative and important post! I feel so very fortunate that my father is a CPA who taught us kids all of these things as we were growing up. As a result, my net worth was far higher than my husband’s when we married! Luckily, he is an open and fast learner. I wish high school did a better job of teaching this!

  3. I am fortunate enough to be able to say that I don’t have any debt. My goal right now is increasing my emergency fund, and saving for when I can travel again!

  4. Great post of the financial independence basics! After a painful divorce, I found Dave Ramsey then the FIRE community. Both changed my life and gave me the ability to take care of myself.

  5. These are great tips! I was just thinking about how I wanted to do more with my 401K but didn’t really know where to start. Now I have a better idea.

  6. I am interested to see what the calculator says we have. We are almost completely debt free and have been working on emergency savings and retirement

  7. The only debt we currently have is a minute amount of credit card debt from necessary purchases made on an interest-free card to be paid in full before the interest starts. We don’t have a lot, but we do have net worth. If I had only listened to what my father said about funding an IRA when I was 18, I would be in such better shape. But, like you said, a lot of things can sidetrack that, the first being the childish attitude of “I can do it tomorrow.”

    1. sabrinaanthony.media

      Some in the FIRE group had to come out of retirement for unexpected life events such as having children. However, with the information and determination that they have, it does not take them long to head back into retirement. Glad I was able to share information with you. Thanks for your support.

    1. sabrinaanthony.media

      I agree with you 100%. The sooner we can we should be working on our future finances. Thanks for the support.

    1. sabrinaanthony.media

      Awesome! No debt is impressive. Saving for a travel fund is over the moon. Thanks for the support.

Leave a Comment

Your email address will not be published.