Four reasons you'll never be rich and one reason you will be rich
LOUISVILLE, Ky. (WDRB) -- Many people remember watching Robin Leach's "The Lifestyles Of The Rich And Famous" TV show. Some might remember thinking about having all the money they could ever want. That included Mark Lamkin from Lamkin Wealth Management. "I remember thinking if I could only make $50,000 a year, I could do anything in life I wanted," he said. "And if I could make a $100,000, I may even meet Robin Leach on his show!"
In the past 24 years in the financial planning business, Lamkin has come to realize several common issues that prevent many of us from getting wealthy. The best part of this, he says it that we can fix them!
Four reasons you'll never be rich:
1. "C Student" with "A" Lifestyle- Remember during high school there would always be the goody two-shoe who sat in the front row, raised her hand constantly, and stayed after class to ask more questions? Well, she went places. Lamkin says he was the guy who strategically sat in the middle of the classroom because he thought teachers only pick on people in the front and back.
Lamkin says his football coach also reminded his team, "Men, if you continue to just get C's and B's, then all you'll ever live is an average lifestyle. You can't make chicken salad out of chicken crap!," he said. From then on, Lamkin says he hit the books like a maniac because he wanted options. Whatever type of student you are, make sure your lifestyle gets adjusted accordingly
2. The Inability to delay gratification. - Even though you haven't given your best and can't afford the best, there's a strong tendency to go into debt in order to fulfill your immediate desires. This country has over $800 billion in credit card debt and the average American that has debt has over $10,000! If you ask anybody who has consumer debt after their fifth beer, they'll admit they bought things they couldn't afford and did not need. Delaying gratification until you can afford something is absolutely one of the keys to building wealth. Piling on credit card debt at a 15%+ interest rate is a sure way to financial failure. Not even Warren Buffet has returned greater than a 15% annual compound return in his illustrious career.
3. Car Shopping. A car is the number one personal finance killer because it is an unnecessary luxury that rapidly depreciates over time. The best financial coaches in the country suggest spending no more than 1/10th of your gross income on the purchase price of a car. If you make $50,000 a year, then buy a nice second-hand Honda Civic for $5,000. If you make $500,000 a year, that new 4 series BMW coupe is quite alright. Americans have a love affair with the cars, so if you must have a new car every 2 to 2.5 years lease a smaller car. If you're buying, don't buy new and let someone else take the depreciation hit.
4. Doing what's expected. You always do what's expected or needed at work, at home and in saving. You always do the minimum of what you "should" do. When you first begin your career, you know nothing. You're a cost center who is easily expendable by management. As a result, it's imperative to do everything possible to show your worth by coming in early and leaving late. You ask colleagues if they need help and whether you can take on new responsibilities. Even as a veteran employee, it's important to never take your work for granted. Nurture your career as much as possible.
That includes saving. Back in the 70s, worker bees wouldn't really save because they had pensions and Social Security to depend on. Nowadays, people still seem to be saving as if Social Security and pensions will be a 100% guarantee with a national savings rate of under 5%. The government has already highlighted that Social Security can only provide roughly 70% of its benefits in the next couple of decades in its current state. Meanwhile, pensions are disappearing fast. If you're not maxing out your 401k, or saving at least 20% of your after tax income every year, you will likely be very dependent on the government or loved ones to get through your remaining years.
The one reason you will be rich:
You're already Rich!
No matter what you think about wealth, the good news is that you are already rich, if you are reading this post. Someone with a net annual salary of $30,000 a year, is part of the top 1.23% richest people in the world, according to the nifty calculator by
www.globalrichlist.com. Unfortunately, not all of us can earn U.S. dollars and live abroad. Bottom line: If you have questions, feel free to email Lamkin at firstname.lastname@example.org Find a mentor, find a coach and if you're a do it yourselfer, Dave Ramsey has great materials to get started. Lamkin says he has no affiliation with Ramsey's firm, he simply likes his materials and respect his views.