Let’s talk about financial status, money and wealth.
Perhaps, you’re doing your best to build your business, increase passive income and buy everything your heart desires. It’s a goal for many that is the byproduct of a healthy bank account.
Many of us strive hard to get there. We’re motivated by that new car a friend just bought, the extravagant trips he takes to remote islands and the high-rise apartment building he lives in. It’s not unnatural to desire the trappings of the world that we see others obtaining. We can do it too or even exceed their success!
The thing is, once you “make it” (or you’re on your way), a new type of anxiety kicks in and you are left with two options. First, you can boast about all of your achievements. Second, you can keep silent and live a life of stealth wealth, pretending that you’re still running a race you’ve already won.
After all, who did you cheat and steal from to get that wealthy? Society has a terrific way of discrediting achievements. “Nobody is self made,” or “You didn’t build that,” are two common responses.
We may think that more success comes with less drama, but the reality is often: “More money, more problems.” The question then becomes, how can we live off the fruits of success and yet never lose site of the fact that the journey to financial independence is what’s most rewarding.
The goal is to be rich, not to look rich
There’s nothing wrong with making money. It’s okay to celebrate your success, but there’s a fine line between that and showing off. In a world where, income inequality, the gap between rich and poor is quickly widening in many countries, the goal is to be rich, not to look rich.
In certain situations, it is wise to blend in. Flashiness is quickly becoming less ubiquitous among the high-net-worth crowd. They’re trading in hilltop houses with a view for homes in neighborhoods hidden from Google Street View. Discreet wealth is the new status symbol which means you can absolutely have it, and not flaunt it.
If you want to build wealth discreetly, and enjoy the fruits of good money habits here are few tips to get started.
1. Build your emergency fund now
Be ready for the financial surprises that life throws your way. Regardless of your income, unpredictable expenses come when you least expect it.
Prepare yourself for rainy days while the sun is shining. An emergency fund gives you peace of mind, reigns in spending habits and can prevent you from making disastrous financial decisions (i.e., the interest, fees, and penalties associated with bad borrowing habits). Although there are plenty of money lending institutions out there, nothing beats having a stash of cash saved up in advance.
2. Hold a few accounts with different banks
It’s perfectly okay to have a few accounts with different banks. Why? Because there are more than a few perks associated with having more than one banking relationship. You can adopt this strategy without landing a windfall of cash.
It’s not uncommon for an entrepreneur to hold accounts with a retail bank, commercial bank (for business transactions), investment bank for portfolio management and a credit union to benefit from lower rates. You can also separate your savings from checking and diversify your assets.
The reality is some banks are better than other banks at certain things. At a minimum, creating separate accounts can force you to get organized, increase spending discipline and create banking relationships you may need down the road.
3. Pay down your bad debt quickly
When you pretend you take home less than you do, you mentally discipline yourself to cut expenses and allocate a percentage of income to repay outstanding debts. Start by pretending you earn 10% less than you do and direct those funds to something meaningful. This is a smart way to easily get out from under soul crushing credit card debt and enjoy more sustainable living.
4. Grow your retirement savings
Think of the years ahead. Now that you’re building a business, or a side hustle, with an increased income, put more money into retirement savings (e.g., IRA (traditional or Roth), a Solo 401(k), a SEP IRA, a SIMPLE IRA or a defined benefit plan). Research the best retirement wealth planning tools. Saving for retirement is like planting a seed. You can’t see the reward now, but in the future you will reap its fruits.
5. Plan for your kid’s education
In most cases, student loans are considered financial aid used to help students access higher education. However, student loans aren’t doing us any favors.
Student loan debt is now the second highest consumer debt category–behind only mortgage debt, according to a Forbes report. Student debt has crippled the progress of the path towards financial stability; and if you’re planning to build generational wealth, it’s not helping either.
Instead, create an education financial plan. Generational wealth starts by equipping your family with the tools and resources they need to succeed. Perhaps start by building a multigenerational family business as well. Much of the proceeds can go towards a college fund.
6. Escape the pressure to splurge
“People who make the most money spend the biggest chunk of their consumption on luxury goods, but even the poorest households spend a significant amount on luxuries,” according to an analysis released recently by Deutsche Bank Research.
Just because you have it doesn’t mean you need to spend it. Of course, you can and should treat yourself, but be thoughtful in your approach to spending. Eating at a fancy restaurant every night might be enjoyable, but is it a smart long-term play?
7. Refuse to be a human ATM
Once your broke family, broke friends, and even jealous peers know how much you earn and what you can afford, chances are they’ll treat you like a human ATM. As a result the pressure is on to share everything you have by obligation and not by choice.
This will also free you up to build more authentic relationships. When you have money or power you’re never quite sure whether a person likes you or the benefits they think you can provide. This is especially true when it comes to romance.
Discreet wealth pays dividends
Now that you know the benefits of stealth wealth and the underlying costs of flashing it all, it is time to develop a smart financial plan.
Pretending to earn less than you make is not an odd concept. In fact, most successful people do this and it is one of the quickest ways to attain financial freedom. Change your approach and relationship with money and the road to financial success is always one decision away.
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