The Wealth Pyramid (3 sides to building wealth)

^{Read time - 3 minutes / Disclaimer}

Having a plan when growing your net worth means:

- Less stress.

- Less anxiety.

- More confidence.

Unfortunately, knowing what to focus on is the big question.

Building Wealth

Growing your net worth in your 20s, 30s, and 40s isn't a common topic:

- In high school.

- In college.

- At work.

Sure, everyone wants to become a millionaire.

But no one gives you a clear roadmap.

When I was a kid, my family struggled financially.

The bills were plentiful.

The money was scarce.

It made me want more for my family as an adult.

To not stress over money.

To be able to help your kids.

To be able to help your parents.

To work less and enjoy life more.

I was so determined to figure out money.

I spent a decade working at a bank.

That's when I discovered:

The wealth pyramid has 3 sides.

Each side helps grow your net worth in a different way.

Focusing on all sides helps you build wealth more quickly.

Let's dive in:

Side 1: The Net Worth Builders

The net worth builders is about "growing" money.

For example:

- Investing in stocks.

- Investing in real estate.

$1 invested in stocks has doubled every 8 years on average (based on the S&P500).

$1 invested in real estate has doubled every 14 years on average (since the 1990s).

"Compound interest is the 8th wonder of the world, he who understands it, earns it." —Albert Einstein

Side 2: The Cash Flow Mindset

The cash flow mindset is about "keeping" money.

A common investing objection:

"I don't have any money to invest."

The cash flow mindset is about watching your finances closely using either:

- An app.

- A spreadsheet.

Doing so helps you "find" extra money to invest.

"You need a written gameplan for your money (a budget), or you're going to wonder where it all went." —Dave Ramsey

Side 3: The Income Levers

The income levers is about "making" money.

As much as possible...

A few ways to do that:

Getting promotions.

Working your way up the corporate ladder.

Opening a service business.

Creating your own small company like a dog walking business.

Offering a product.

Creating something to sell like a physical product or a digital product you offer online.

"If you don't find a way to make money while you sleep, you will work until you die." —Warren Buffett

Conclusion

The idea behind the wealth pyramid is to constantly give attention to all 3 sides.

Side 1: To invest every month (even if it's a small amount).

Side 2: To track your cash flow every month to free up extra money to invest (using an app or a spreadsheet).

Side 3: To continually find ways to make more money (getting promoted, starting a side business, etc).

Leaving out one or more sides can slow down your wealth building efforts.

Consider spending 15 minutes thinking about which side may need more attention this year.

I know it's not easy. 

But it's worth it.

Keep building 💰

See you next week.