I get this question a lot so I’m going to break this down #30DaysofThreads
1) The first place to start is with reality. One of the best ways to build wealth is by using your “discretionary income” and piling it on both sides of your “personal finance balance sheet”. A thread...
1) The first place to start is with reality. One of the best ways to build wealth is by using your “discretionary income” and piling it on both sides of your “personal finance balance sheet”. A thread...
Your balance sheet aka your net worth is comprised of 2 sides: assets & debts. Your NW increases as you add to your assets and pay down your debts. Your discretionary income is what tips that ⚖️. So 1st things 1st: you must identify what that discretionary income number is.
Your discretionary income is the monthly amount of money that’s left over after all of your expenses are paid. So plant yourself somewhere and write down the hard cold facts of what you bring home each month and what you have to pay each month. What’s left over is your DI.
Another hard cold truth is normally the DI you’ll see leftover is trash. It’s trash bc typically as our income goes up our lifestyle goes up at the same or even faster rate. Are there sometimes extenuating circumstances? Sure. Generally, however, it’s bc of trash decisions.
So if your discretionary income number is trash...I got you bew. And at least now you’re planted in reality. There are two ways to fix that: increase income or reduce expenses. I’m a fan of both.
Let’s talk about how to reduce expenses first. I hate when someone says, “I really don’t feel like I spend that much.” Hush & stop trying to make financial decisions based on feeling. Let the black & white do the talking.
Pull up your last 3 months of bank & credit card statements. Highlight everything on there that was a want versus a need. Add up all of those numbers and divide it by 3. That is your monthly discretionary income.
Here’s a harsh reality: most of y’all are EATING & WEARING your net worth building money. Ainteem gone go into that car you ain’t need. From 16 to 18 I worked at McDonald’s and made $4.25/hour. I had thousands saved of that money by the time I graduated HS.
Let’s say you look at your statements and don’t see anything you “wanted” but didn’t need. You need additional income to build your net worth. I’d side hustle the sh*t outta my nights and weekends. Uber, a business you’re passionate about, wholesaling, rent your spare bedroom...
Once your discretionary income kicks up thru either adding income or reducing expenses, you bank roll an emergency reserve and then get busy with investing in owning some sh*t that’ll work when you wanna relax. I promise none of the above takes rocket science. Just discipline.
