“What you focus on expands.” – Esther Jno-Charles
Who wouldn’t want to expand their wealth? If the saying is true, and I believe it is…expanding your wealth starts with some focus.
Here are three easy ways to expand your wealth simply by being intentional:
1. Know your monthly living costs.
Living costs are the bills which are largely unavoidable and need to be paid, including:
- Vehicle costs
- Payments on debt
- Any other committed costs (Netflix, gym membership, etc.)
Make a list of all of these expenses and tally the total. You may need to revisit bank or credit card statements for some of these.
The sum of your living costs each month is what it takes to get by. It is the least amount that you need to bring in to cover all of your bills. This is important not just to get the bills paid, but also in understanding how much of an emergency fund to build (generally at least 3 times your monthly living costs), but also in establishing a wealth target for retirement (generally at least 25 times your annual living costs).
Knowing is half the battle!
2. Know your net worth.
Your net worth is the sum of all of your assets, less any debts. This includes bank account balances, retirement accounts, what your home is worth, and the value of any other investments. I generally exclude vehicles and personal property from this, since these are depreciating (and often fleeting) assets. Debts include the balance of your mortgage, student loans, credit cards, etc.
Knowing your net worth is to keep your eye on the ball. It is motivating to obtain and recognize that positive number and then track it as it grows. Again, what you focus on expands.
3. Be intentional to expand wealth.
Be aware of the impact on your living costs and your net worth with each financial transaction you consider.
- How will the move into a more expensive home increase your living costs?
- How about that new car?
- How will that purchase on a credit card which you can’t afford to pay for right now affect your net worth?
While an occasional stop to buy coffee probably won’t deplete your net worth, the daily stop could very well slow your progress.
With an awareness of your living costs and net worth, you are bound to grow wealth.
What you focus on expands.
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