The Parable And The Path

"Unless we change our direction, we are likely to end up exactly where we are headed."

No truer words have been spoken when it comes to wealth building.

You don't become wealthy overnight. No one does.

Most people become wealthy in the most boring way possible.

Tiny daily transfers.

Automated investing.

Saying no to lifestyle creep.

Opening the Roth.

Buying the index fund.

Saying no to a lifestyle they can't afford.

Personally, I think we tend to overestimate dramatic moves like promotions, inheritances, and stock market rallies - and underestimate the subtle course corrections we can make.

"Unless we change our direction, we are likely to end up exactly where we are headed."

It reminds me of sailing.

You don't yell at the wind. You adjust the sail.

If you are spending everything you earn, the math is not mysterious.

If debt is compounding faster than investments, it's not going to work.

If investing is optional instead of automatic, inertia will win.

This is why I talk about trajectory so often with my students.

Not:

• How much do you make?
• What's your title?
• What did you major in?

But:

• Are you buying assets or liabilities?
• Are you paying yourself first?
• Are you investing, even if it's a little bit?

What train are you on?

And what direction is it heading in?

The bold truth is that we don't need more income, we need shifts in our direction.

Research shows that many high earners still live paycheck to paycheck. Not because they lack intelligence, but because they never altered the path.

The Shocking Number of Rich People Who Live Paycheck to Paycheck
Nearly Half of US Consumers Earning $100K+ Live Paycheck to Paycheck

Here's my question:

If you keep doing exactly what you're doing right now...
where do you end up?

And if you adjusted by just one degree, what could change?

Here are just a few of my suggestions:

• Build a 3-6 month emergency fund before investing aggressively.
• Automate your investments.
• Open the Roth.
• Move from stock picking to low-cost index funds.
• Redirect a bonus into eligible funds instead of upgrades.
• Set up a system to pay down high-interest debt.
• If you have access to a 401k, increase your contribution.
• If you have access to a 401k, use it to fully capture the match.
• A tax return? Use it to fund your investment account.
• Set your investments to increase automatically by 1% each year.
• Turn on dividend reinvestment.
• Move cash sitting idle in checking into a high-yield savings account.
• Refinance high-interest debt if possible.
• Consolidate and eliminate small recurring subscriptions - and take that money and put it into your investment account. Even $15 a month can make a difference.
• Open a brokerage account if your retirement accounts are maxed.
• Fund a 529 if you have children.
• Use raises for investing, not lifestyle expansion.
• Review your expense ratios (fees on funds) - get them below 30 bps if ideally lower than 10 bps.
• Increase your HSA contributions if eligible and invest the balance.
• Replace high-fee funds with low-cost index funds. Even if it costs you to make the change.
• Track your savings rate instead of your income.
• Automate charitable giving if part of your values.
• Cancel one status purchase for another need.
• Make your credit score a measurable KPI.
• *Build a wide income stream and invest 100% of it. (this is my favorite)

Because unless we change our direction, we are likely to end up exactly where we are headed.

And you are far too capable to drift into a life you didn't choose.

Email me for details on any of the above suggestions if you have questions.