The Truth About Building Wealth: It's BoringSubmitted by Castlebar Asset Management on October 18th, 2017
The idea of building wealth is incredibly exciting. Who doesn't feel at least a little jazzed about the prospect of hitting your biggest financial goals, creating financial security and freedom, and, eventually, getting to use some of that wealth to live an awesome life?
Daydreaming about what’s possible when you create a comprehensive financial plan that empowers you to build your wealth is thrilling.
But there’s a difference between the idea of building wealth and the actual process of doing it.
And that difference is that the process is not that exciting at all. In fact, it’s downright boring.
What’s So Boring About Building Wealth?
Here’s the thing: the keys to financial success are actually pretty simple. That doesn't mean they’re easy to do all the time, but the fundamentals at work are straightforward:
- Spend less than you earn.
- Aim to save at least 20 percent of your salary. The more you save (and invest), the easier it will be to reach your goals.
- Make use of your 401(k) or other tax-advantaged retirement plan. Max it out if you can.
- Pay off debt and stay out of it. Minimize your spending and expenses (and when you do spend, make sure it aligns with your values).
- Invest wisely and in a way that aligns with your risk tolerance and capacity, time horizon, and long-term goals.
The good news is that building wealth doesn't require you to be elite, or to be in a C-suite, or already rich to begin with. You can reach your goals if you follow these steps over time, regardless of where you are today or where you started.
The bad news is that you have to follow these steps over and over and over again for years. Rinse and repeat. Frankly, it can be boring to do the same thing repetitively -- even when you know it’s the right thing to do.
Boring Doesn't Have to Be Bad
Before you get too bummed, let’s look at the upsides. Again, building wealth is relatively simple. That means you don’t need complicated strategies that are difficult to understand.
It also means you can automate a lot of your wealth-building activities. 401(k) contributions, transfers to your savings accounts, monthly investments in your brokerage account… you can set up all these actions to happen automatically -- and then stop worrying about them.
An automated, set plan can help you ride out periods of time where other investors react emotionally to market movements. That, in turn, can help you build wealth faster because you won’t make the mistakes that happen when you fiddle with your investments.
Keeping your finances and wealth-building simple, straightforward, and without complication also means you have more time and energy to spend on living life right now.
Boring isn’t a bad thing, because it allows you to rest easy knowing things are progressing (even if nothing exciting is happening right this minute). You can feel confident you’re getting closer to your goals and growing your assets in a strategic, smart way over time.
How to Keep Your Focus Along the Way
Building wealth is a process you measure in years, not days, weeks, or months.
Still, it’s tough to keep your eyes on the prize for years. Distractions are everywhere, especially if you find yourself getting bored going through the same steps year after year on the way to your goals.
If you find it hard to deal with the fact that exciting stuff isn’t happening in your financial life daily, use some of these tactics to keep you on track:
Look back at how far you’ve come. When you start feeling like nothing’s happening, take a look at where you are today and compare it to where you were 5 years ago. You’ll likely see significant progress, even if you didn't feel it day to day. Now imagine where you’ll be in 5 years from now!
Embrace the calm and be grateful you don’t have to deal with chaos. A little gratitude can go a long way. Consider what life would be like if you didn't have a financial plan to guide you along your wealth-building journey, or if you constantly had fires to put out in your financial life.
When it comes to money, “exciting” isn’t necessarily a good thing. It could also mean stressful, scary, and chaotic. Nothing going on probably means everything is going to plan.
Get someone to hold you accountable and to serve as a sounding board. Sometimes it’s nearly impossible to deal with boredom and stay the course -- especially when you’re motivated, action-oriented, and love seeing progress.
That’s where a professional like a fee-only financial planner can come in and hold you accountable to the right actions (even when that’s no action at all). Perhaps even more important when you’re feeling bored, they can be there for you when you just need someone to talk to.
Being able to have meaningful conversations about money can also help ease the restlessness that comes with wealth-building boredom.
Being bored is part of the process to building wealth. And that’s not a bad thing. Stay the course and remember, wealth happens over time, not overnight.
Andrew Comstock, CFA
Please contact me at 913-660-0708 or by email to discuss your financial planning and investment management needs. You can sign up for our monthly newsletter here. Follow me on Twitter @CastlebarAM.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.