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Wealth Creation Habits – B.The Treadmill

Check the transcript of the video here:

Hi. My name is Maciej Stanek, Senior Financial Advisor at Véurr. In our series on wealth creation habits, today I will discuss the habit that leads to line B. I covered what the vertical, horizontal, and diagonal lines represent in the video on wealth destruction, so if you miss that, go back and watch it first.

In this chart line B shows the impact on your wealth if you have a habit of spending everything that you earn. Clients with this habit tend to describe their financial situation, saying things like, “I never seem to get ahead.” Or, “Even when I tried to save money, something came up and I used that money to pay for that unexpected expense.” Or, “I really needed to buy a $300 juice maker so I can save money on buying juices each week.”

This habit is quite obvious to someone like me who helps people achieve financial freedom every day but goes unnoticed by the person with the actual habit, and in many instances, it is never picked up and therefore never addressed. I’m going to pause here to give you an opportunity to think about your cash flow and ask yourself, am I on a financial treadmill?

Coming back to the rich, get richer and the poor get poorer excuse we give ourselves, I’ll again challenge this statement by sharing a story of a friend of mine. He is currently in his mid 40s and owns multiple properties, one of which is even debt free. He also has shares, savings and other assets. It may surprise you that he was a machine operator at a factory when he left school, and he worked in that role before he changed to being an entry level administration officer.

I tell you these details as he never had a high payroll. He is also the child of immigrant parents who came to Australia when he was young. He had no wealth to help him build from either. He married young and wanted to buy a house, so he put in extra work in the factory and set aside as much money as he could each year to build a good deposit for this house.

Within a few years, he had saved $50,000 at the exact same factory and the same period there was another person who had the same skills, same pay, and almost the same work hours. The second person liked to drive around in the newest car and go to the local pub on the weekends. He would generally take a loan for the car and commit to repayments for the required period only to buy another new car when the first one was paid off and again, recommit to repayments on this next vehicle.

These two were friends and would talk often. The second man often complained that he lived from paycheck to paycheck and the job didn’t pay him enough for what he did. Meanwhile, my friend had saved a deposit, purchased and then paid off his house only because his habits for managing money were so different. After working in the factory for over a decade, my friend left with an accumulation of some wealth while the second man still had nothing more than the car that he still owed money on.

At this point, I would suggest that if you feel that the second individual is you, it’s time to A, look at your credit cards and your bank statements. B, list all of your expenses so that you know exactly what they are and how much they take away from your income each month. If I was you, I would prioritize the expenses and start to eliminate the expenses that you consider are your lowest priority, or at least try to minimize them. If this bad habit relates to you, you can work on fixing it and moving to an individual who is represented by line C in the next video.