The idea of becoming rich may hit us in extremes. We may deem it super easy or dramatically difficult. In reality, building wealth is usually more nuanced and defies being categorized as either “easy” or “hard.” One thing it may certainly be, if you don’t currently hold a vast amount of wealth, is mysterious. What do you really have to do to get rich if you didn’t inherit millions? What are the lesser known steps?
In a video posted on the YouTube channel she co-founded, The Financial Diet, Chelsea Fagan explored eight things about getting rich that you probably haven’t heard much about, as they’re just not openly discussed.
Feeling guilt over that weekly run to Starbucks for a decadent latte? Regretting the $5 bracelet you bought at Marshalls on a whim? Of course, little expenses can add up and take a toll. But it’s the big stuff that you need to be concerned about when building wealth.
“It’s not because you buy avocado toast once that you’re not going to buy a home,” Fagan said, adding that you should look at your overall major lifestyle expenses instead of fixating on the little things.
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As you get older, you may start to see peers getting ahead of you (or so it seems) financially. People move up in their careers, buy property, start a family, travel more luxuriously, etc. And you may start to feel a little bit of unspoken pressure. Why aren’t you at that same level? Stop yourself right there. If you go any further with these types of thoughts, you’ll risk succumbing to lifestyle inflation.
Lifestyle inflation, also known as lifestyle creep, is when you up your spending as your income rises, often leading to a higher standard of living that can hurt your financial goals and put you in a position of accruing debt. The main issue here is that you may be making more money, but is it enough money to justify leveling up so much?
“A lot of Americans are living beyond their means,” Fagan said.
“One of the key aspects of saving money is automating so you don’t have to think about it,” Fagan said. To automate effectively, make as many costs in your life “fixed costs” — meaning that even as you make more money over time, they stay the same (think mortgage or rent payments, car insurance premiums or child care expenses).
Automating savings is more than just a technical banking move. It’s a way of making savings a fixed cost, too — but one you increase as your earnings go up.
