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Even though you may not always be open to taking advice from older friends or relatives, the reality is that it’s essential to learn from those who have done what you want to do. When it comes to building wealth, there are various financial experts and authors that you can turn to. However, sometimes it helps to take advice from regular people who have acquired the results that you desire.
This is why GOBankingRates spoke to Carla Adams, CFP, founder and financial advisor at Ametrine Wealth, to find out what lessons she learned from wealthy boomers that can apply to all generations.
Wealth Building Takes Time
“The power of compound returns never ceases to amaze me. But it requires patience to see the results,” said Adams. We live in a world where we can have anything delivered to our doorsteps with a few clicks, and it can be difficult to practice patience. According to Adams, the wealthy boomers that she works with have been investing for decades, and the results didn’t just show up overnight.
This means that your wealth-building journey is something that you’ll be working on for many years to come. You don’t just suddenly come into money. You have to find ways to save money, invest and stay the course when trying to build up your nest egg.
You Have To Live Below Your Means
“I know it’s something the younger generations don’t want to hear, but wealth is typically built over time by living below your means, along with disciplined saving and investing,” expressed Adams on the reality of embracing frugality. “I’ve worked with many wealthy boomer clients over my career who have amassed millions. The majority of them have been steady earners and great savers.”
The major takeaway is that what you save is more important than what you earn. There are many people out there with significant salaries who are unable to live within their means. Then again, some wealthy boomers amassed their fortunes by saving up over time.
How can you live within your means?
- Always track your spending to ensure that your expenses don’t exceed a specific limit.
- Find ways to cut back on your housing and transportation costs, as these are major expenses for most.
- Try to avoid picking up too much debt because credit card debt payments could hold you back from saving.
- Pay yourself first to ensure that you’re always setting some funds aside.
If you can figure out how to live below your means and invest the difference, you’ll be able to build wealth with the power of compound interest on your side.
Avoid Get-Rich-Quick Schemes
“Younger generations — and I’m a millennial, so I see this amongst my peers — are looking for a get-rich-quick answer by making risky investments in the market, real estate or looking to start up a not-so-well-thought-through business,” remarked Adams.
In the last few years, social media has become filled with alleged success stories where some young investors made millions from cryptocurrency or some other speculative asset. What doesn’t get mentioned as often is that many people have lost their life savings on speculative assets.
As tempting as it is to chase some scheme to make lots of money in a short period of time, it’s critical that you keep in mind that many of these alleged investors pushing investment opportunities are often charlatans looking to capitalize on unsuspecting people who don’t realize that they’re being scammed. If an investment seems too good to be true, it often is. You can learn from wealthy boomers who prioritized the slow and steady approach over chasing the next exciting investment opportunity.
You Have To Find Positive Financial Role Models
Adams stressed the importance of finding positive financial role models instead of chasing get-rich-quick schemes so that you don’t just look up to random social media influencers acting successful online. “I think a lot of this mindset can be attributed to social media, where there are so many ‘influencers’ out there talking about their own success in some get-rich-quick venture, whether it be true or not. And we see everyone’s social media posts of their seemingly amazing vacations, their expensive purchases, etc.”
Even though it can be inspiring to see a travel picture or the occasional luxury item on social media, it’s important to find positive financial role models. Wealthy boomers didn’t build their savings by looking up to social media influencers bragging about their success.
Adams concluded this lesson with a reminder for everyone: “We don’t see the full story, which often includes either racking up a lot of debt or long hours of tireless work at their not-so-exciting jobs.”
While many wealthy boomers may not be flaunting their riches on social media, the reality is that they have money saved in the bank, so they don’t feel the need to brag online.
You Should Chase the Right Dreams
“I, by no means, believe people should give up on their dreams, not pursue innovation and start their own businesses, because I have seen tons of success from peers starting their own businesses,” Adams said. “But the best successes come from the pursuit of passion, hard work and understanding the risks and blind spots.”
Wealthy boomers chased their dreams, but they were realistic and aware of their finances when taking risks. It can be tempting for other generations to take significant risks without considering the financial consequences of quitting a job or trying to pursue an entrepreneurial venture that doesn’t come with any guarantees.
Adams summarized her main lesson from wealthy boomers regarding chasing the right dreams: “Chase the dream of what you want to create, not the dream of sudden wealth.”
All generations can learn from wealthy boomers about the importance of chasing the right dreams instead of getting caught up in unrealistic scenarios.
If you’re looking to build wealth, there’s likely a bit of advice in this article that will help steer you in the right direction. Remember that saving money and building up your savings is a time-consuming journey that requires patience and perseverance. Luckily, many wealthy boomers have shared lessons that can help you navigate your finances.
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