Here’s Why Financial Planning Is Not Just for the Wealthy
Hope is not a game plan. And unfortunately, too many working-class Americans making average incomes rely on hope instead of strategic and personalized financial planning to grow their wealth potential. No matter how much money you make in a year, you can always make financial plans to increase your wealth. Financial planning is not just for the wealthy.
If you want to become financially independent, you must make plans for such a future and stick to them. And it would help to have a financial advisor assist you.
Contrary to popular belief, about 68% to 88% of millionaires and billionaires are self-made successes. In other words, they did not inherit their wealth; they built their wealth from scratch with shrewd financial planning,
The average American makes about $50,000 annually, more or less. But that estimate is not the norm, especially in the 2020 coronavirus aftermath of involuntary mass unemployment.
The average entry-level salary ranges between $16,500 to $33,000.
But the point here is that whether you make $16,500 or $1.65 million annually, there is no reason not to plan for the future financially.
Financial planning is not just for the wealthy. And before we explain to you why here are some misconceptions about the rich and how they make and keep their fortunes that you should know about.
Myths About the Rich
Financial planning is not just for the wealthy. And it is important to understand that the wealthy only become rich and stay rich through strategic financial planning.
Yes, some people are born rich, but not all. Most rich people create their own wealth and keep it through financial planning, not living check to check and hoping for better times.
You know that Jeff Bezos, the Amazon founder, and space cowboy, has a net worth of $136 billion. As of this writing, Amazon is worth over $1 trillion.
Did you know that Bezos is one of the self-made millionaires who was born in humble beginnings to teenage parents? Bezos grew up working on his grandparent’s Texas ranch.
Bezos worked at Mcdonalds’ as a teen. He got married young and came up with the idea to launch Amazon from his Seattle garage in 1994. Bezos was renting the home at the time and didn’t own it.
He started out delivering Amazon orders himself in his own car!
The point you must consider is that Bezos was not born rich and did not become one of the world’s richest people by accident. Financial planning is not just for the wealthy. And the only way that Bezos launched Amazon was through the application of strategic financial planning.
The wealthy notoriously stay wealthy by being frugal. Famed stockbroker and billionaire Warren Buffett lives in the same $31,000 house he bought in 1958, not a mansion.
The rich are notorious for not wasting their money on materialism. Rich people are also notorious for not carrying cash on their person. It keeps them from making impulse buys and getting robbed and helps them retain their wealth. (They usually carry credit cards, which they can pay off easily, to make purchases.)
I can add more examples. But just consider that to become rich, you must adjust your mindset about money. Money is a tool to be used to increase options in life.
The saying “beggars can’t be choosers” exists for a reason. But financial planning is not just for the wealthy. You don’t need a lot of money to plan for a better financial future.
But you do need a strategic financial plan to expand your wealth. Even Jeff Bezos did when he was dreaming of Amazon in his Seattle garage in 1994.
Here’s Why Financial Planning Is Not Just for the Wealthy
If you make $16,000, $33,000, or a million annually, you should make plans to grow and protect your wealth.
Financial planning is not just for the wealthy.
Here is what you should consider.
You’ll Identify and Fix Your Financial Mistakes
A big part of financial planning is learning or improving your financial literacy. Financial literacy is the practice of learning how to earn, save, borrow, invest, grow and protect your finances in an efficient minor without falling into a debt quagmire.
Another part of financial planning is learning how to budget. When you budget correctly, you learn how much money you earn and owe and how you are wasting money.
Financial planning will change your mindset about money. You will learn that money is a tool that you use to have more options in life, not something to spend as fast as you get it.
Start making financial plans, and you will learn the financial mistakes you may be unaware you are making and which are keeping you from becoming rich.
Keeps You Prepared for the Unexpected
Rich people don’t carry cash. They don’t want to make impulse buys, and they want to protect their wealth.
You may not be at that stage in life, but there are other ways to protect your current income by saving your money at top banks. For example,you can start a savings account or an emergency fund.
Over 32% of Americans could not cover a $400 financial emergency. And while that is a low estimate, almost 80% of Americans said that they are doing “okay,” when it comes to their personal finances.
Protect your current income by financially planning for future emergencies. Dedicate a percentage of your salary to a savings account or emergency fund.
You can also open a health savings account, or HSA, at any bank or through your employer. As long as you use the funds in an HSA for medical expenses, the money will never be taxed.
Financially prepare for the unexpected so your income can grow instead of being disrupted to pay for an emergency.
Do It for Your Loved Ones
Would your family or spouse be financially OK if you died today?
Do you have a will drawn up? If you don’t have an estate plan, a local probate court could decide who in your family is a beneficiary posthumously, divide up your estate and assets, and distribute as they see fit.
Strangers, estranged relatives, or former business partners could contest a probate ruling and fight for a piece of your estate. Your family could be cut out of your estate entirely. Or become burdened with legal bills as your estate is liquidized to pay them.
Make financial plans for your family’s future. If you don’t, a local court will.
Consult a financial advisor to learn how to make financial plans to grow your wealth.
After all, failing to plan is just a plan to fail, especially when money is involved.
Allen Francis is a full-time writer, prolific comic book investor and author of The Casual’s Guide: Why You Should Get Into Comic Book Investing. Allen holds a BA degree from Marymount Manhattan College. Before becoming a writer Allen was an academic advisor, librarian, and college adjunct for many years. Allen is an advocate of best personal financial practices including saving and investing in your own small business.