We all know well paid professionals, business owners or thought leaders who make lots of money, live large, and have very little to show for it all in terms of real assets.
I saw a documentary recently about American athletes. Shockingly, the majority of ex footballers, baseballers and basketballers (all millionaires in their day) end up effectively broke.
In the Millionaire Next Door, Stanley and Danko share their surprising research which shows very little correlation between earnings and net wealth.
Because of course, wealth is not about what you make, it’s about what you keep.
Recently Matt and I ran a series of seminars promoting Thought Leaders Business School. Matt shared a back-of-the-envelope approach to growing wealth, which I love:
- Get your practice earning at least Blue Belt (~ $500k a year)
- Make sure your cost base in your practice is under 25%
- Live off half of your post-tax income
- Invest the other half
In other words, invest as much as you spend. Keep 50% of what comes into your bank account. Do that for ten years, and it’s all good.
Love to hear your thoughts – are you creating a gap between what you earn and what you spend? You can leave them below.
