3 signs that you are likely to build wealth in your lifetime

What determines whether someone will build up wealth during his or her lifetime? No, it isn’t high salary alone. Read on to find out if you already have what it takes!

A high-paying job automatically leads to building wealth. Right?

Well, not really. A sizable paycheck certainly helps, but it is not enough to enable an individual to build wealth. In my experience, your income (i.e. the money you bring in) matters, but your lifestyle choices (i.e. money spent) plays just as big a role. Your spending patterns and financial decisions shape your ability to create reserves and build a solid foundation that will outlast you.
The good news is that the personal characteristics that favor wealth accumulation can be developed through awareness and repetition.

Financial literacy

Money does not come with an instruction manual. What’s worse is that so few of us have had the benefit of constructive parental modeling around money. It is not surprising that adults must invest in building their own financial literacy.

What exactly should you be learning about? The answer depends on where your personal knowledge gaps are. I recommend getting comfortable with the concepts of budgeting, cash flow planning, and saving for retirement. Learn about the benefits of tax-advantaged retirement savings accounts. Even if you are not a “math” person, learn to calculate interest. For those of you who feel that you have no time to dedicate to financial literacy, consider that spending just 20 minutes a day reading personal financial planning expert blogs instead of your Facebook feed could make a real difference.

Low susceptibility to social pressure

Yes, this speaks to the proverbial “keeping up with the Joneses”. Making financial decisions based on what you observe others doing can lead to devastating outcomes. All you can observe from the outside is that your neighbor is driving a brand-new Lexus. That tells you nothing about whether he has enough savings to write a check for that Lexus, or if it was a financial stretch that is effectively compromising his retirement.

How can you tell whether you have high or low susceptibility to social pressure? Reflect on how much of your buying behavior is typically influenced by what you observe others doing, wearing, driving or eating. A set of goals that matter to you and your family, combined with less focus on the social media, can do wonders for re-calibrating your decisions.

Focus

Focus is your ability to not get distracted. Some people are naturally better at this, while others have to train their attention. In my experience, stronger focus enables people to create a budget and not get pulled astray by the temptations of the “sale” rack. If also allows them to set aside 20 minutes to work on updating their spending records – then actually work on the task at hand without getting sidetracked by Instagram and cat videos on YouTube.

If your focus “needs more focus”, create an environment where you can take baby steps to build the right habits. Use a budget and spending app that forces you to record every purchase. Write down the task you should be working on (“download credit card statements” or “update last month’s budget”) and put it next to your computer as a reminder. Create small goals that will encourage future progress.

Building wealth during your lifetime

In addition to financial literacy, immunity to social pressure and a great ability to focus, building wealth (or accomplishing anything for that matter) has a lot to do with your belief about whether you can do it. Psychologists refer to this as your “locus of control”. If you typically have a worldview that bad things happen to you, and that you have very little control over your outcomes, you may find it difficult to maintain constructive financial behaviors. If, on the other hand, you believe that things happen because you make decisions and take action, then you are more likely to feel like your choices can make a difference.

Remember that no matter what your financial situation looks like, you have choices. You may not like your choices, but it is not the same as not having any options. If money is keeping you up at night, reach out to a trusted professional. You do not have to do this alone.

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