Be Rich on Any Income – Hyper Wealth Accumulation

While the world advances toward automation and AI, it’s time to shift your finances into hyper-wealth accumulation mode. The best part, you don’t have to start rich. Narrow your focus on the goal to end up rich at the finish line.

Besides it’s way better than starting rich and ending up poor.

Redefining the Financial Journey Not the Finish Line

Wealth is not the finish line; learn to redefine the trajectory.

The most common misconception about wealth is that you must earn more income to be worth more. Your net worth isn’t compromised solely by your income. It’s a bit more complicated and way more intentional. If you want to build wealth quickly and sustainably, plan and take action.

Invest in More Assets and Purchase Fewer Liabilities

In the game of capitalism, the more assets you own the better you are. Inversely, the more liabilities you owe, the worse off you end up.

Although you shouldn’t obsess over your net worth, setting milestones of generating more zeros is a great incentive.

Your net worth is comprised of intangible investments and tangible investments like property. From earned income, passive income, life/health insurance, retirement accounts, and cash; all of it adds to your bottom line. In contrast, everything from credit card balances to student loans, mortgages, and personal loans; takes away from your worth.

Without fail, purchasing productive ASSETS and limiting interest-burdened liabilities is the name of the game.

Gaining Insight from What You Earn and How You Use It

The majority of college graduates have an average of $30,000 in student loans. On top of that, they carry at least $3,000 in high-interest credit card debt.

These consumer debts are the entry drugs to a lifetime of interest owed if you aren’t careful. Over 40 years, this ends up costing Americans at least $500,000 in interest.

Starting modern adulthood like this can seriously harm your financial future. If you aren’t stringent about spending and saving, you will start to pay out more than you earn. This is especially bad during periods when interest rates and inflation rise.

Due to the low-interest rate environment (before 2021), paying off student loans was been easier. With the Fed hawkishly monitoring inflation since 2022, the tightening credit sped up debt on interest.

By 2024, consumer spending and confidence began to wane. With less borrowing (by business), we witnessed a spike in layoffs. Additionally, with demand increasing, prices went up. So did defaults, overdraft fees, labor shortages, and overall consumer debt.

Economic benefits such as the stimulus of 2020 and 2021, further added to the problem. Here are some solutions for younger Americans:

• Start paying closer attention to their finances versus the next social media dance trend.
• Never borrow more student loans than the median entry-level pay for your industry.
• Consider going local and in-state.
• Make better use of your time to learn critical soft and technical skills, and
• finally, consider every purchase on a credit card as costing double what you paid for it.

Staggering Hyper Debt is the complete opposite of Hyper-wealth Trajectory

Although the amount of consumer debt in the U.S. is still at a staggering 15 trillion. Banks are expecting defaults and credit card companies are expecting long-term borrowing at 27 percent. The average American is frivolous in thought and spending. Most don’t even know how money works.

Establishing spending discipline early will help unburden you. You don’t need a new luxury car. That sale is just a marketing ploy to get you to spend more. What you need is an emergency plan that includes at least a one-month cushion.

Most importantly, don’t rely on one income to a family afloat. One income in 2024 is equivalent to taking care of 1.5 people and that’s if you are pulling in at least $90,000 a year. If you are a family of two adults, if one person can’t adequately take care of the home and the children then the answer is simple. Everyone works. Daycare is expensive, employ your parents. They did an OK job with you, you can use them at least three times a week for childcare to curb costs.

Being able to resist the temptation. For women especially, avoid at all costs the moniker of #tradwife. If your partner leaves you, you are out of luck with ‘the ‘job experience’ and functional skills. Being overly dependent is a purpose killer.

Finally, avoid spending time with anyone who keeps screaming YOLO. You only live once and likely until the ripe old age of 78. Retirement is expensive, you can’t afford to be indebted until the end. The longer you stay in the spending phase, the longer it will take to exit the workplace.

Getting into the Hyper Wealth Quadrant

Most jobs equate the reward for doing good work with more work. The staff then confuse more work with more income. It doesn’t play out that way and it doesn’t always equate to living freely. Most end up trading more time for more work with less pay and fewer upsides. Even fewer realize this by the time they are fifty.

Most graduates are pulled in by the promise of a paycheck and forget to diversify their passive income streams. Your wealth will not come from the income. In a capitalist system, it comes from the (productive) assets you accumulate.

Relying on one income source or a company is financially dangerous. The stock market is the most accessible market in the world which also happens to be an inflation hedge. Additionally, the market is a great way to defer taxes. For the first six months of 2024, I earned a bonus of $500 (pre-tax). After taxes, I netted $327.75. During the same period, my household’s investment portfolio yielded nearly $190,000 in capital gains. To keep it simple, $500 is not equal to $190,000.

With free commission trades and fractional investing, there’s no reason not to make building wealth easier for yourself. Yet, the majority of Americans are still living paycheck to paycheck working towards that bonus or a hopeful raise.

Education is the best way to get ahead. You don’t lose; you either win or don’t learn.

It’s all priorities.

• Don’t rely on one income source or employer to keep you afloat,
• Realize that everyone is replaceable,
• Nothing is guaranteed in life and neither are you entitled to the outcomes,
• Run if someone starts making promises to you, and
• Keep yourself healthy to avoid massive health bills

Understand the three phases of converting income into wealth

If you’re someone who believes your earned income is one part of the recipe then you are halfway there. The majority of Americans have one source of income; families have 2.5. Get yourself a family quickly to get more money. That was a freebie. But seriously, the average millionaire has seven sources of income. They use every last one of them to accumulate more assets that earn more income. That’s the secret recipe.

Now don’t get me wrong, earning a large sum of money helps but it’s not enough. Consider your income in phases.

Phase 1: Baby Wealth Accumulation

When starting your career after graduating college, the first step is reading through the employee handbook. Make a plan to use all the benefits from classes, training, retirement matching contributions, etc. Since college doesn’t teach us financial literacy, you need to set that task for yourself.

While you are younger, work a few side hustles like photography or bartending. Make YouTube videos, anything to add to your income. For God’s sake, please learn to speak to a crowd, in a small audience, or with friends.

Become interesting by investing in experiences. Even seasonal jobs can propel your net worth to pay for expenses to finally be independent. Focusing on income is important but never neglect your biggest advantage (TIME). In the end, you will crave more time than money.

Finally, job hop as frequently as needed. If your job doesn’t promote you in two years, it is time to run to the next application.

Phase 2: Midlife Wealth Accumulation

After you’ve settled down with a ‘stable job’ for a few years, it’s time to get intentional with your cash flow. Max out your 401k (403b or 457b). Why? Especially if you have a matching contribution of at least $3,000, after 40 years at 8 percent, it’s worth over $800,000. With your contribution, your end balance jumps to over $1.6 million.

Those with no access to a 401k can invest in a traditional or Roth IRA. You don’t have to overcomplicate it. The more money you make, the more you can and should invest.

Most people can and should live off less than $5,000 monthly (or $60,000 annually). Every dollar over that is an opportunity to reduce taxes and grow your net worth. After that, all you need is more time. The adage says, “Time in the market is more important than timing the market.“

Phase 3: Last Ditch Wealth Accumulation

This stage in life is when you are ready to settle down. Your investments will exceed $500,000 and your career should be stable. This is the point when you should make sure you have savings and an exit strategy.

If you have the extra dollars, it’s time to employ the fantastic four (CPA, CFP, Lawyer, and Doctor).

Your home and investments are now the majority of your wealth. Protecting them is a top priority. You do so with an understanding of how to best use your dollars. Ideally, your net worth should be 20x your gross income. About 30 percent should come from the net equity in your home. Your assets-to-liability ratio should be about 4-to-1. For example, if you have $1 million in assets, you should have no more than $250,000 in liabilities. Also, pretend any bonuses don’t exist.

However, let’s say you didn’t invest anything or you were hit with a life reset.

You should aim for at least $100,000 annually from multiple jobs (if need be).

Try not to panic. There is nothing worse than losing your cool when up against the ropes. The benefit of hitting rock bottom is that the only place to go is up. Go up!

For everyone else, keep paying yourself and pay off all remaining debt. Debt beyond the age of 50 is harder to get rid of.

The Misconception of Wealth Accumulation

Having a stable job and career is a basic necessity and goal we all strive to have to make ends meet. Have something to look forward to waking up to every morning. The goal, the plan, and the dream can all come true if you try. Even if you fail, it is worth trying.

Following dollar signs won’t solve all your problems. The dollars simply give you more opportunities to help solve them. Your relationship will go further than our investment. The pot of gold at the end of the rainbow simply doesn’t exist. What you find on this journey is purpose, peace, and gratitude.

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