Wealth in Words

As the saying goes, the best time to plant a tree  was 30 years ago. The next best time , is right now. With all the questions you may have around saving and investing  it can make it hard to actually get started. But the best thing you can do for yourself and your family is just begin! Start learning, begin acting on the information you find, assessing the outcomes, and implementing changes to best suit your needs. Heading into 2016 I knew that I needed to start boosting my savings account  substantially as it was slipping below the minimum threshold that serves as a psychological comfort zone. The previous year, I had to purchase a new vehicle which depleted a significant portion of my savings. Compound that with irresponsibly managing my monthly cash flows  two years before and I was approaching a slippery slope. With only 3 months of savings in my emergency account I decided to make some immediate changes for the year ahead. Below are some of the...

Warren Buffett and Bill Gates have referred to this individual as the smartest man they know. He may be best known for his book of witty remarks and sage advice called “Poor Charlie’s Almanac.” Of course, I am alluding to Charlie Munger. Munger is the long-time business partner of Warren Buffett . Together, this team has grown their conglomerate, Berkshire Hathaway, into one of the world’s most respected businesses. Below are some observations from “Charlie Munger: The Complete Investor” that should help you in your own financial , professional  and entrepreneurial journey . Solve Hard Problems by Using a Checklist Munger is a proponent for using checklists  to get your most important tasks done. He states that “I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important.” Similarly, Buffett has said that “if you haven’t written it down, you ...

Knowing whether or not you are saving enough is a constant concern. The uncertainties of life consisting of its twists and turns can create even more room for question. Financially speaking, the best way to protect yourself from these unforeseen events and to minimize your worry is to have adequate savings. However, before answering how much you should save, we need to look at how much you can possibly save. In other words, you need to begin documenting your monthly income and expenses. Start by using a simple budgeting worksheet . Fill in your income and subtract expenses to get a quick estimate on whether or not you have any money left over each month based on your current spending habits. If there is no money left, you need to find ways to immediately cut extra expenses, find discounts, and minimize costs  to create money that can be used for savings. Once you do have some positive net income there are several options. First, a portion of it should be put into c...

There are certain activities that all successful entrepreneurs do very well. While writing The Creator’s Code , Susan Wilkinson uncovered six commonalities shared by founders of some of the most recognizable brands. Though interesting in this context, these traits are not limited to building a profitable business. Parallels can be drawn into your personal finances as well. Find the Gap – See opportunities that others don’t see. Finding the best investment opportunities often requires doing things a little bit differently. For example, Warren Buffett has advised that we “be greedy when others are fearful and fearful when others are greedy.” Markets move in cycles . Learn the basics for why prices go up and down. Then you will be able to find investment opportunities that others are missing .  Drive for Daylight – Top-level entrepreneurs focus on the future. Wilkinson notes that “researchers at the University of Chicago found that people who ar...

Every day we face a barrage of stimuli from the world around us. If we are not careful, these distractions can keep us from reaching our goals. When you focus equally on essential as well as non-essential tasks, nothing gets done. Think of it like a race car team preparing a car before an important race. There are countless tasks that could be done in the limited hours beforehand but ultimately the o nly thing that matters is doing the tasks necessary to get the car across the finish line. When it comes to steering your money and finances in the right direction, make time to decide which vital functions you must address right now to make improvements this year.  These vital factors are your most obvious or urgent needs. For example, paying down credit card debt, student loans, car loan, creating a budget , building a savings account , or starting investing  could be one of your top three financial priorities. Begin to focus all your effort on improving these t...

Sticking to a spending plan can be tough. One of the keys to successful budgeting  and staying with your financial plan is to regularly check in with where your money is going. Any simple tool like a pen and paper, smart phone, or Microsoft Excel is effective for tracking finances. Instead of putting off planning, the basic monthly cash flow budgeting plan below can be quickly customized with your income and spending habits within a few minutes. The minimal work required for you to input and maintain your numbers periodically will pay dividends, literally, as you get a better grasp for where your money is going and how to create more of it .   After making it a priority to track your finances, regularly schedule time each week to assess how your current spending compares to your initial budget. You may realize you need to rein in spending or, better yet, but less-likely, you are under-spending. The important thing is to regularly schedule a “date” with your ...

In light of Mother’s Day I thought it would be helpful to reflect and impart some of the financial wisdom my mother shared with me. These quick, simple nuggets of advice continue to prove useful as I navigate adulthood. 1. Create a budget Soon after graduating college I was able to secure an investment job in the region I wanted. However, this required that I move out of home and begin living on my own. Facing this new chapter in my life, my mother took time to write out a budget  with me detailing my cash inflows versus outflows and determined how much I could expect to have left over. She emphasized that the key was to have something left over each month to  save   or invest   while still living comfortably. Overall, I learned that a budget is nothing more than a road map that helps you maintain control of your finances. 2. Maintain a healthy savings reserve Growing up I did various jobs during my summer breaks from school. During this time my moth...

In The Last Safe Investment, authors Bryan Franklin and Michael Ellsberg describe a different path we can take toward acquiring true wealth . Ultimately they argue that we should double-down on investing and spending on ourselves  to develop our unique abilities. Not only will this pay future dividends  but it will also allow for you to live a more fulfilling present life, immersed in your passions. In order to achieve our best lives, the authors suggest that we develop two skill sets. First, we need to build our market skills. Market skills allow us to offer something to the workforce. For example, you go to college and study finance with a specialty in accounting and then earn your CPA designation. You have acquired the market skill of accounting and can use that to earn a living. While this path is reliable and traditional, there are inherent limitations noted by the authors. For instance, a market skill is not terribly unique and will not allow for you to differen...

Socially Responsible Investing (SRI) is an investment style that caters to environmental, social, and corporate governance concerns. A socially responsible investment has two mandates: find companies that promote positive social impact as well as offer opportunity for financial gain. As it turns out, the two are not mutually exclusive. For example, from 1990 through 2013 an investment in the MSCI KLD 400 Social Index would have produced a higher return on your investment than a buy and hold strategy with the S&P 500 Index. Visually, the chart below dispels the myth that investors may sacrifice some potential gains in order to meet their socially-conscious investment objective. Instead, the opposite may be true. That is, socially responsible companies may make better products and earn more money for their shareholders, thereby creating long-term value through a higher share price. As the markets have evolved so too have SRI objectives, driven by shifts in societal and i...

“Someone is sitting in the shade today because someone else planted a tree a long time ago.” – Warren Buffett When it comes to conquering the challenge of living financially free you must make saving a priority. In other words, it is essential that you create excess cash reserves to put toward paying down your debts and investing in your future. This can be accomplished through earning more income or, more immediately, by putting a plan in place to minimize expenses. Jim Rohn has a simple formula  for savings that can be used effectively to start growing your reserves. As a result, focusing on saving will train your mind to think about abundance. Focus on all the things you can do with what you have right now. Remember, the more you save the more you will be able to invest and, in turn, you will be able to exploit compounding of interest . Putting your money to work for you is a key element in your quest to acquiring wealth . “The rich invest their money and spend what...