Budgeting your way to generational wealth

December 16, 2021

First, just a matter of housekeeping. WE PASSED 50 SUBSCRIBERS!

Thank you. Thank you for trusting me to be judicious with your inbox. I can honestly say I feel like this is just the beginning.

Budgeting your way to generational wealth

No one likes a budget.

No one likes talking about it.

No one likes doing it.

And it sure as heck puts no one in a good mood.

But, I believe budgeting is essential to creating generational wealth.

I grew up with parents that had good spending habits and instilled good spending habits in me.

I was always pretty hesitant to spend money and worked a number of different jobs. That meant by my nature, I was a saver.

But when I got out of college and on my own, it was a whole new ballgame. You see, when I was in my parent's house, my money pretty much went to gas and golf.

But when I was living on my own, I had more expenses.

Rent. Food. Clothing. Health care.

I'd never had to worry about bills before, but I thought my natural frugalism would carry through. I didn't go buy anything crazy, but I also had no idea what I was actually spending.

It wasn't until a few years later that I realized I was spending enough on food and clothing for a family of 4. It wasn't that I was doing anything crazy, I just didn't have the self-discipline necessary to say no.

And that is what makes budgeting so necessary. It gives you visibility into your numbers and helps you create self-discipline.

This self-discipline is the foundation of generational wealth.

While I won't try and convince you that millionaires or billionaires keep a strict budget, those who have built something from the ground up had to have a significant gap between earnings and spending.

That sort of gap doesn't usually just appear but is instead created through intentional actions daily.

So, the natural follow-up is, what is a budget and how do I use it to create generational wealth?

I will put some resources below that I've released over the last few weeks to help you with actual budgeting if you need it, but I think it can be boiled down to one thing.

You budget your way to generational wealth by ruthlessly managing your spending so that it is no more than 70% of your income.

This means saving or investing 30% or more of what comes in.

Why 30% you may ask? You will typically hear numbers of 15 to 20% to save for retirement. This is great, especially since most people aren't doing this.

But by bumping that number up another 10%, you allow yourself a cushion to spend your money on income-producing assets.

We'll save that discussion for next week.

Below you'll find the resources I mentioned above.

Twitter threads

Podcast Episodes

Question of the week

What is your current saving and investing rate? Do you have any plans to increase or decrease it?