Chapter Content
Okay, so let's talk about financial wealth. Um, and really, the big question here, the thing we gotta think about first, is what does "enough" even mean to you? Like, what's *your* definition of enough financially? Because, you know, it's different for everyone.
And look, when we're talking financial wealth, there are, like, three big pillars that hold it all up. So, first, we've got income generation. That's all about creating a stable, and hopefully growing, income stream. Now, this could be from your main job, your nine-to-five, or maybe you've got some side hustles, you know, secondary employment, or even passive income streams, things that kind of hum along without you having to constantly be working on them.
Then, the second pillar, super important, is expense management. Gotta manage those expenses! Basically, you want to make sure your expenses are reliably *below* your income level, and ideally, you want those expenses to grow at a slower rate than your income. You don't want your spending to just balloon, right?
And finally, the third pillar, we're talking long-term investment. This is where you take the difference between what you earn and what you spend, and you invest it. Put it into long-term, efficient, low-cost assets, things that can, you know, compound effectively over time. Think, you know, stocks, bonds, real estate – that kind of stuff.
So, to kinda get a handle on where you’re at, there's this thing called a Financial Wealth Score. It’s just a way to check in with yourself.
Basically, you respond to a few statements with a number from zero to four. Zero means you strongly disagree, and four means you strongly agree. So, the statements are:
"I have a clear definition of what it means to have enough financially."
"I have income that is steadily growing alongside my skills and expertise."
"I manage my monthly expenses so that they are reliably below my income."
"I have a clear process for investing excess monthly income for long-term compounding."
"I use my financial wealth as a tool to build other types of wealth."
Add up your scores for each statement. You get a baseline score somewhere between zero and twenty. It's just a starting point, no biggie.
Okay, so now, let’s talk about goals. Use the goal-setting framework to calibrate your Financial Wealth compass.
So, think about it: What Financial Wealth Score do you want to achieve within one year? And what are, like, two or three checkpoints you'll need to hit along the way to actually get there? What do you want to avoid?
And then, think about systems. What are the two or three systems that you can implement to make tangible, compounding progress toward your goal score?
Alright, so, to jump start all of this, we're gonna do a simple audit of your current situation, a little financial check-up, you know?
So, first, let's look at your income. What are your current sources of cash coming in? How stable are they? Are they growing predictably? And can you boost your cash inflows by, you know, building new skills or using your current skills more effectively?
Next, let’s think about expenses. How consistent are your current cash outflows, what’s going out? Are those outflows reliably below your inflows? Are your expenses growing faster than your income? And do you actually have a budget and a plan? If not, you might want to create one. Just track what's going on.
And finally, long-term investments. Do you have a strategy for investing the gap between your income and expenses in things that'll grow over time? If you don't, think about opening an investment account with a low-cost brokerage, and maybe set up an automatic deposit, even a small one.
This audit, this quick check-in, it gives you a solid starting point, a baseline to start building that financial wealth. So, give it a shot. It’s a great way to get started, you know?