Building Wealth When You Don't Come From Wealth

Helping our clients build wealth is one of the things that brings us the most satisfaction at Myrick CPA. Here are some observations that may be helpful if you're working at building wealth but don't come from money yourself.

One of the things I most enjoy about working with my clients at Myrick CPA is helping them to build wealth. I believe that focusing on personal wealth-building does not mean ignoring or being silent about systemic disparities. But here are some thoughts I want to share in hope that they'll be useful to those who are trying to build wealth — especially for those who don't come from wealth.

Mindset

One of the most difficult barriers to building wealth for those who don't come from wealth is understanding what impact poverty can have on our mindsets. What happens to our minds when we feel we have too little? How does constant scarcity shape our choices and our behaviors? Scarcity affects both our thinking and feeling.

Research has shown that poverty can automatically and powerfully focus us on unfulfilled needs. The mind is heavily focused on meeting needs in the present, causing us to have a bias towards the here and now. We only attend to urgent things and fail to make small investments even when future benefits can be substantial. To attend to the future requires mental resources, which a state of constant scarcity depletes.

Yet we need our mental resources to plan and to resist present temptations. We need our mental energy to make a household budget and avoid the temptation of spending that would diminish our ability to save. We need to recognize that poverty at its very core depletes our ability to exercise self-control over our finances.

Writers and financial educators, and fellow CPAs, such as Anne-Lyse Wealth, believe that it's important to recognize and pay attention to our mindsets and thoughts. She recommends practicing this on a daily basis. She observes that "the act of consciously paying attention to your thoughts and then choosing to entertain different ones instead,” is essential to wealth-building.

Budgeting

Your mental energy and mindset are important to being intentional about budgeting and investing, which are the keys to building wealth.

This is especially challenging given that today poverty and scarcity increasingly take the form of volatility in income, precarious income sources, and unexpected expenses such as health care bills. This article has some useful thoughts on managing in situations of volatile income.

At the same time, many believe that a high salary will eventually lead to accumulated wealth. But realistically, it probably won’t without being intentional about managing your expenses — and investing.

Building a household budget is an essential tool to help you manage your expenses. Managing your expenses helps you increase your savings and ability to invest. These are some suggestions about building a budget.

The same goes for your tax bill. Tax strategies that reduce the amount of taxes you pay on your income can help you save and increase your ability to invest. That's something that we at Myrick CPA can help you with. We also provide our clients with tax planning assistance. This puts you in a position at the beginning of the year to take the most advantage of ways to minimize your tax bill for the coming year. It can also help you in coming years to think about what types of assets offer the most tax advantages to invest in.

Investing

Start investing as soon as you can afford it — even if that means only putting in a small dollar amount. Many experts note that there’s a mindset shift that happens when you build financial discipline as an investor. You can start with even a small amount, and allow that investment to build through compound interest over time. Starting small is the secret, and being consistent is the key.

Be willing to create your own path

There’s no one-size-fits all for wealth building. It can be achieved by entrepreneurship, a side job, investing in real estate, or simply saving and investing wisely.

But remember that no matter which path you choose, what will make a difference is your consistency.

We at Myrick CPA offer tax preparation for individuals using a process that combines smart, personalized planning with annual tax preparation and filing. Our job is to help you know about all the available tax opportunities that meet your individual needs and circumstances. We work closely with tax lawyers, and investment advisors to ensure that all the details are legally sound, technically accurate, and working to your maximum benefit. Contact us to learn more.