By Brenda Weathers Hargroves
First KAREN, now we have HENRY (High Earner Not Rich Yet). HENRYs are young workers whose household income is between $250K -$500Ky, yet they still can’t seem to increase their net worth.
How things have changed. During my early working days, you were considered rich if your household income was $100K. And, at that time, most people I knew in this category were accumulating wealth.
Many families, however, are challenged when it comes to building wealth. While the amount may not have been as much in the past as it is now, student debt has always demanded a huge chunk of people’s paychecks for a good number of their future working years. Purchasing a home has always been a difficult goal to achieve. It took every penny my parents had to scrape up the down payment they needed to buy a $25,000 three-bedroom house. And although we're currently suffering through a difficult inflation period, the cost of goods and services has always been on the rise. Prices in the past were lower, but then again, salaries were as well. So you see, the ability to accumulate wealth has never been easy for the average family.
What can today’s young families do to address these age-old challenges? It’s really simple. Follow tried and true wealth-building strategies. Most experienced success when they adhere to methods that have stood the test of time.
Create and Stick to a Budget
The only way to get where you want to go is to start where you are. Track your monthly income and expenses. Ideally, you're bringing in more than you're spending. If not, budgeting will help you determine what’s eating up your money and ways to stop the bleeding.
Budgeting methods vary. The idea is to develop a realistic spending plan that allocates funds to cover your needs and allows you to save for your wants, emergencies and retirement. Here are some examples of ways to design your budget.
Save, Save, Save!
I can’t stress enough how important it is to get into the habit of paying yourself first. If you are not doing so already, figure out a way to start saving.
How? Take a good, hard look at how much you are spending on wants to see where you can make cuts. I’m not suggesting eliminating all wants. You don’t want to become so discouraged with sacrificing that you abandon your budget. But I’m sure if you examine where you’re spending, you will find areas where you can lessen the amount or eliminate the expense altogether. Once you’ve determined how much you can save, check out a post I published that suggests ways to do so.
Eliminate Debt
Paying off debt should be a priority. Once you successfully meet this goal, installment amounts you were paying can now go to your savings. Plus, it’s freeing to know you can cover ongoing monthly expenses without also having to worry about prior obligations.
The best way to eliminate debt is to calculate a realistic amount you can set aside for this goal. Then work to pay off the lender you owe the least or the most, whichever works better for you. Some of us like to attack small amounts first, others want to conquer the larger ones.
Whatever you choose, celebrate your milestones. Take a moment to pat yourself on the back. Or maybe it's time to treat yourself to one of your wants.
The worst thing you can do is ignore debt. If you are having difficulty meeting your obligation, try to negotiate a more affordable payment arrangement. Ignoring debt can ruin your credit, which makes achieving other goals difficult, if not impossible.
Manage Your Expectations
Honestly assess your needs and wants. Don’t be a victim of FOMO (Fear of Missing Out). Do you really need a newer car? Or a bigger house? Or that highly esteemed credit card? Chasing these things leads to unnecessary spending.
Ban Instant Gratification
Resist ‘buy now, pay later’ incentives. Live within, preferably below, your means. When I think about managing expectations, a quote attributed to Will Rogers comes to mind. To paraphrase, “Too many spend money they haven’t earned to buy things they don’t want to impress people they don’t like.” Don’t let this be you!
To summarize, whether your household income is $250K or $40K, there are things you can do to start accumulating wealth. Check out my post, Want To Achieve Financial Wealth? Here’s How. And if you’d like to chat, visit my website, https://www.literallybusiness.life, to schedule a free 15-minute consulting session.
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