Balance Your Financial Life With the Three Pillars of Wealth
A budget is great, but that’s not all if your goal is to increase your net worth. Over the long term, there are three key areas that matter for improving your finances: maximizing income, minimizing costs, and investing.
As the personal finance blog Thoughts of an Anonymous Lawyer points out, many of us tend to focus on just one of these categories. This usually minimizes our costs because it is often the easiest to do. You feel in control of your life when you can save on your daily coffee. However, all three categories are necessary if you want to achieve financial independence:
For a person in the accumulation stage, the most important thing is to balance three directions of growth: (1) maximizing income, (2) minimizing expenses, and (3) investing. Ignoring any of these factors will make it difficult for your NW to grow.
Of course, increasing your income can be roughly translated as “Find a better job” or, in some cases, “Make your employer pay you more.” Neither one nor the other is so simple. Not to mention, you can only invest when you have the money to invest. It is tempting to think that you will get to them if you have the time or the opportunity. However, even starting small can help you get on the right track. However, neglecting these areas will end up making it harder for you.
Balance Sheet – The Key To Maximizing Net Worth | An Anonymous Lawyer’s Thoughts via Rockstar Finance