Certain purchases, like shopping for designer clothes or making daily impulse buys, don’t provide the lasting amount of value necessary to live a rich life. Rather than spend all of your money on these purchases, the savvy approach is to strive toward reaching three keys and carefully investing in assets for each one.
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What are the three keys necessary to become rich? GOBankingRates spoke with David Edmisten, CFP, founder and lead advisor at Next Phase Financial Planning, about investing in a solid financial foundation, improving your personal value in the marketplace and investing in your health.
Solid Financial Foundation
A solid financial foundation is the first key that those who want to be rich should strive toward. Edmisten recommends purchasing a diversified mix of stocks and bonds for one’s financial assets.
Stocks, Edmisten said, are growth assets. They help increase wealth and outpace inflation over long periods of time. Purchasing bonds, as well as dividend-paying stocks, can also provide interest and dividend income. This creates cash flow to help provide retirement income.
The best part about spending your money on stocks and bonds? It’s easy to do. Edmisten recommends most people consult a financial planner to invest in a manner that aligns with their risk tolerance.
Improving Your Personal Value in the Workplace
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There are several programs you can invest in now that can help make you a valuable asset in the workplace. Edmisten recommends considering these options:
- Coaching
- Training
- Classes
Taking these courses only helps you improve your skills, but it can help you increase your earning power. By spending money on these programs and using them to sharpen your existing skills — and learn some new ones — Edmisten said you’ll be able to increase your earned income. This leads to building more wealth.
Investing in Your Health
We often overlook health as a necessary investment in ourselves. There are several purchases you can make that, if you use them daily, allow you to invest in your personal health and wellness. This goes beyond buying home gym equipment or enrolling in exercise classes. Edmisten also recommends learning to cook, eating healthy and pursuing active hobbies.
Being rich, Edmisten said, is not necessarily about saving a specific dollar amount. It means living a great life, and a key part of that is keeping yourself in great health.
“Being healthy can help you live longer and enjoy a better quality of life,” Edmisten said. “It can also help reduce costly medical issues later in life, so there is a tangible financial benefit to being healthy. Less doctors’ bills mean more money available to do what you love, and you’ll feel better to boot.”
