The Three Pillars of Wealth
Expense Management
Efforts to increase income and invest are useless if you don't first learn to control spending.
Invest
Use compound growth to build long term wealth. Learn about index funds, asset allocation, taxes and tax sheltered accounts (Canada only).
Increase Income
Increase your ability to provide value to society to boost income.
- Learn about forced savings to manage your money with maximum simplicity.
- Conduct an expense audit to understand where your money is going. Control your money or it will control you.
- The three biggest expense categories are: Shelter, Transport and Food.
- Increase Savings: Balance expense reduction with increasing income.
- Learn about the Debt Avalanche – The Quickest Way to Pay Down Debt, according to math.
- Set SMART Savings Goals
- Understand Vehicle Depreciation
- Evaluate renting versus owning for the largest financial decision most make.
- Take care of your stuff! Phone, car, shoes, clothes, house, ect.
- Cut costs with relevant skills such as cooking, negotiating, home and auto maintenance.
- Understand low-cost Index Funds. They will statistically outperform stock selection and professional mutual fund managers.
- Learn about human biases and risk to ensure your investments match your unique risk tolerance.
- Understand Taxes for Investing: A Guide for Canadian Beginners
- Learn about the Tax-Free Savings Account (TFSA) to generate tax-free investment income.
- Should I use the TFSA, RRSP, or taxable account for my investments? I use this calculator to better understand how the accounts affect after-tax wealth.
- Understand the difference between decisions and outcomes.
- Invest in your knowledge, skills and habits to improve your ability to solve problems. You are paid in proportion to the difficulty of the problems that you solve.
- Understand the difference between scalable and non-scalable income.
- Improve investment income from Pillar 2.
- Understand the progressive tax system and how taxes apply to investment income.
- Develop a “Side Hustle” to diversify and increase income streams. Online tutoring is one of many possible side hustles.
