Getting Wealthy vs. Staying Wealthy

In an age of consumerism and keeping up with the Joneses, many perceive ‘WEALTHY’ as a status symbol of how valuable they are to society. The definition of wealth across the world is extremely subjective. How wealthy we feel often depends on what form of wealth we are focused on. For some people, being wealthy means owning the biggest home on their street, and for others the more livestock they owned the wealthier they were considered to be by their community. I would like to share some of the most vital lessons to consider with regard to not only getting wealthy but also maintaining your wealth.

Getting Wealthy

To start with, building wealth has little to do with your income or investment returns and lots to do with your savings. A lot of people connect true wealth with being able to live life on your own terms. I feel like that statement is extremely vague. True wealth is the accumulated leftovers after you spend what you take in. Whether you earn minimum wage or are taking home a six-figure salary, you stand no chance of building a stable financial future without a high savings rate. Contributing to your savings month after month is the only thing that matters.

James Clear in his critically acclaimed book, Atomic Habits, suggests automating good behaviour to achieve your long-term goals. Having an effective and repeatable system that allows you to automate good behaviour is vital for you to build your wealth. One simple way I try and do this is by doing my weekly meal prep on a Sunday Afternoon. This not only allows me to save money during the week, but I also get to eat a lot healthier. Automating good financial habits like taking money out of every paycheck and putting it into investments is a core principle to building your wealth. Having the discipline to not only put some of your earnings to the side but also the resilience to not touch those funds goes a long way in improving your financial and mental well-being.

Staying Wealthy

There are a million ways to get wealthy, and plenty of books on how to do so. Staying wealthy is where it starts to get a little tricky, and we can all learn a thing or two from the life of Mike Tyson.

Mike Tyson is the perfect case study on how not to spend your money. At the peak of his career, Mike could Earn $30 Million for one night of work. Bear in mind he would knock out the majority of his opponents within the first 3 rounds, putting his average earnings at $30 million for a seven-and-a-half-minute job. At the height of his career, his net worth was estimated to be $400 million USD. Mike was one of the highest-paid athletes of all time, but one thing led to another, and an unfortunate turn of events had him file for bankruptcy in 2003 to pay off his debts. Some of the things he burnt his wealth on were a gold bathtub that reportedly cost him $2.2 million, exotic pigeons, mansions, cars, jewelry, and a Siberian Tiger named Kenya.

While all the possessions Mike Tyson owned may have seemed attractive from the outside looking in, his life was a complete mess. Less is always more and if Mike had decided to be even just a little frugal with his spending, one can only imagine what his net worth would be today. As I write this, his current net worth sits at approximately $10 million.

Morgan Housel in his best-selling book ‘The Psychology of Money’ says keeping your wealth requires the opposite of taking risks. It requires humility, and fear that what you’ve made can be taken away from you just as fast. Staying rich involves just a few simple things such as self-awareness, modesty, and the ability to delay gratification with a portion of your earnings.

Anyone Can Act Rich

‍Acting rich isn’t that hard. What’s hard is acting like you’re not rich even when you make a decent chunk of change. We are all susceptible to making rash decisions and falling into the trap of instant gratification with our money. I often find myself wanting to buy a nice pair of Jordans just so I could look good. The truth is, no one is impressed with your possessions as much as you are.

I would like to end by saying money can’t buy you happiness but saving can cheer you up. Knowing that you have a safety net to fall back on for a rainy day will give you peace of mind over your finances. We live in an age of plenty, and our human needs are unlimited.  As much as spending more brings joy it shouldn’t come at the expense of your aspirations for the future.

- Kondwelani Kalinda, Financial Planning Assistant

Kondwelani Kalinda is a Financial Planning Assistant at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Kondwelani Kalinda who is a Financial Planning Assistant for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.