The Wealthy You! – DEFENSE

This week on The Wealthy You; it is irrelevant how much you earn.

What is meant by this is that your income should be and will be fluid. It should ebb and flow with your life, it will have highs and lows throughout your lifetime. You may have a good paying job right out of high school at a young age but which may be dangerous in which there are few people willing to do the job but the people who do accept the job are payed generously, just to keep them coming to work everyday to do such a dangerous job. Then perhaps you get injured from that job and your income falls from underneath you and goes to the lowest income you have had in your life. Who knows how long the injury or other event will have an impact in your life, how long does your income stay low? Then the next work you find is a job that is mediocre in your life that pays a mediocre wage, as an example. Your income will be reacting to events and changes that occur throughout your entire life. It’ll be high and low and in the middle. Preventing your lifestyle from having the same drastic shifts and changes that your income is experiencing will be a major stress relief when your income does drop. This happens by paying yourself first a percentage, minimum of at least 10%, before all your other bills are paid. When you get in the habit of paying yourself first, or collecting for yourself what you work for everyday that you don’t spend, you will always have a pile of cash available when you need it. This will automatically eliminate the feeling of working paycheck-to-paycheck (this is a miserable way of working your entire life). Going to work everyday to pay yourself is the ideal reason why we work, not because it pays the bills (you are your most important bill, if you go to a job that you don’t care for and say “because it pays the bills” but you are NOT paying yourself first, then your comments become hypocritical). Get in the habit of paying yourself first.

When you establish the habit of paying yourself first from every source of income you work for and build, you are also simultaneously eliminating a phenomena that happens when people’s income goes up, called Lifestyle Inflation. Your income goes up then your cost-of-living goes up. This phenomena, despite having a larger income, has led to more financial problems in peoples lives than having a job that just rises with inflation. More money means more access to credit (other peoples’ money), more credit use means more bills to pay to those creditors (bigger house, more cars, fill up the house, do something with those cars) and more bills to others means less money for you, yourself, your retirement, and other you-related wealthy goals. This is a guarantee with Lifestyle Inflation and is a classic ‘it doesn’t matter what you earn or make, what matters is how much you can keep’.

It is important for you to pay yourself at least 10% first and foremost, it is a habit that should be as reliable as eating everyday and drinking water. You will do it your entire life regardless of what you do for income and how much you earn. Why 10% as a minimum though? Good question, there are a few reasons that we will go over throughout this program. In stable economic conditions, inflation (the amount of the money supply inflating within the system), rarely goes over 10% year-over-year. In the most recent pandemic year, inflation hit 6-7% for the United States, a 40-year high. 6-7% is still lower than 10%. Paying yourself at a minimum of 10% from each dollar you touch will help protect the wealth you are building from being eroded away by inflation. You are collecting a larger share of your income than the amount the nation’s total money supply grew by in one year. Of course the effects are mitigated when your collection is appreciating at a rate less than inflation, but we will talk more about this in the OFFENSE section of The Wealthy You. This all happens regardless of how much you earn or get payed. 10% is the minimum but the more the merrier as well. There is nothing wrong in paying yourself more than 10%.

One of the biggest components of the DEFENSE section of The Wealthy You is keeping what you earn by managing inflation and keeping it tame in your life. We are all exposed to it everyday in the economic system we live in, but you can reduce the impact it will have in your life by paying yourself first at least 10% and by building The Wealthy You! literally everyday of your life. And it doesn’t matter how much you earn. But how much you can keep.

Next week; being a collector of wealth, but not all the money you earn is yours.

Become The Wealthy You!

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