Being wealthy isn’t just about how rich you are, aka how much money you have in the bank.
Money is a vital ingredient. Without it, you don’t have the means to a first-class life.
However, it is important, if you want to feel wealthier, that you don’t just focus on making more money, you need to learn how to make the most of the money you are already receiving.
I have the formula for your wealth.
Your Wealth = Your Mindset + Your Time + Your Energy + Your Money
We’ve been taught that to be wealthy we need to work hard to make money.
This means, as we strive to grow our wealth, we focus on working as hard as we can.
I know I certainly did when I was working in the wealth management industry. During my decade in London, I was on the dealing floor for 7 am and didn’t really ever clock off until I took my two weeks holiday. I worked hard to climb the corporate ladder and I earned a top salary which I spent on the lifestyle I was in.
I focussed entirely on my career as a means to be wealthy. This meant that I was mentally and physically burned out because I didn’t have any time or energy to do things for myself. It also meant that I didn’t do anything smart with my money, apart from paying the standard amount into my company pension and saving up for important life events, like buying my first home and getting married. Other than this I frittered away a lot of money that could have been spent much more wisely.
I often look back and wish I’d invested into the property market in London and paid more into my pension to claw back the loss of my personal allowance. When your adjusted net income exceeds £100,000 a year you lose your personal allowance and are hit with an effective tax rate of 60%. This meant I was basically working to give away 60% of what I made. What was most frustrating was I didn’t need the surplus income to live my first-class life, I should have invested it and reclaimed my tax.
How to use the wealth formula
Instead of focusing on working harder to grow your wealth, you need to instead focus on two things:
By doing that you will feel wealthier because you will get time and energy back to enjoy.
Let’s break it down
‘If you don’t believe are enough, you won't feel you have enough’ Catherine Morgan, Founder of the Money Panel. No matter how much you earn, if you don’t have a positive relationship with your money and yourself, you will never truly feel wealthy. You will always chase more money, you won't feel you can spend it freely on the things that matter and you won't feel confident in your ability to invest it. If you fear that there isn’t enough money to go around, you will likely hold yourself back from doing what really matters to grow your wealth with ease. Therefore you need to upgrade your mindset.
You need to make the most of every penny you make to be as wealthy as you possibly can right now and for the future. This involves spending on the things you value, saving for the things you seek, and investing for the things you desire. If you have a surplus income that you do not need right now, leaving it in cash will cost you in the long term due to the impact of inflation and missed opportunities that investments can offer you, compared with cash interest rates.
By investing you have the opportunity to:
Top up your pension and reclaim tax. If you don’t need to pay tax then don’t, it is wasting your time, energy, and money.
Uutilise your annual allowances, such as your ISA allowance. By doing this you are growing your wealth in a tax-efficient environment over the long term.
Compound investment returns and benefit from compound averaging, which means that your investment returns will likely exceed your expectations.
To be truly wealthy you need to make upgrade your mindset, make the most of your time and energy, and be smart with the money you already have.
Would you like to be wealthier?
Arrange a wealth discovery call today HERE, it’s free. Let’s talk about how we can create your wealth strategy.