The Three Pillars of Wealth
Expense Management
Expense management habits are the starting point. Efforts to increase income and invest are futile without expense management competence.
Invest
Use compound growth to build long term wealth. I educate on index funds, asset allocation, taxes and tax sheltered accounts (Canada only).
Increase Income
Increase the value you provide to individuals or organizations to increase your income and fulfillment.
- Conduct an expense audit to understand where your money is going. Control your money or it will control you. Focus on the three expense categories: 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
- Wait at least one week before making a purchase that exceeds 1% of your annual income.
- Understand Vehicle Depreciation
- Evaluate renting versus owning. Account for home ownership expenses such as property tax, selling costs, interest payments and house maintenance. Also, consider the opportunity cost of foregone investment income.
- Take care of your stuff! Phone, car, shoes, clothes, house, ect.
- Learn relevant skills such as cooking, home and auto maintenance.
- Understand low-cost Index Funds. They will statistically outperform stock selection and professional mutual fund managers.
- Understand how taxes apply to investment income to achieve tax efficiency.
- Learn about the Tax-Free Savings Account (TFSA) to generate tax-free investment income.
- 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 to ensure tax efficiency of income sources.
- Develop a “Side Hustle” to diversify and increase income streams. Online tutoring is one of many possible side hustles.
