Knowing all about money isn’t just for the wealthy – it’s for all of us. But that doesn’t mean the rest of us can’t learn from the rich. The financial principles that keep the rich rich are accessible to all of us.Saundra Curry, co-founder of BC Holdings LLC, pointed out a difference in how the wealthy approach major purchases:....READ ORIGINAL & FULL CONTENT FROM SOURCE |
“One of the cornerstone principles of wealth accumulation is the prudent management of major expenditures, particularly in the realm of homeownership and vehicles.
“While it’s common for Americans to succumb to the allure of upgrading their residences every few years, driven by factors ranging from employment changes to status-seeking desires, this tendency is often more emotional than financially sound.”
Instead of viewing homes as wealth-building assets, Curry said the rich think of their primary homes as places to live rather than “source[s] of wealth accumulation and vehicles as merely transportation.”.
Kyle Enright, president of Achieve Lending, emphasized the importance of early retirement savings.
“They save for retirement early and … look at it as ‘saving to provide options,’” Enright said. “In other words, it’s looking at having money to do what you want, when you want — not just the goal of stopping working at a timeframe that might seem too far off for a young adult.”
To illustrate the power of early saving, Enright provided an example: “Let’s say you start with $500 and then save $500 monthly in a savings vehicle that earns 4% over 40 years. With daily compounding, you’ll have more than $595,000 in 40 years. Start with $1,000 and save $1,000 every month, and you’ll have almost $1.2 million. But if you save the $1,000 monthly over only 20 years, you end up with just $369,000.”
Thomas J. Brock, CFA, CPA and expert at Annuity.org, agreed.
“[Wealthy individuals] invest as early and for as long as possible to generate ‘interest on interest’ and accelerate the accumulation of wealth,” he said.
The wealthy are more likely to set clear financial goals and align their spending accordingly.