The #1 Predictor of Your Future Wealth

I’ll give you some hints:
It’s not education.
It’s not income.
It’s not a great job.
It’s not whether or not you have kids.
It’s not whether or not you own your own business.
It’s not intelligence. (people with above-average IQ’s are only 1.2 times as likely as those with below-average IQ’s to have a high net worth)

No, it’s not any of those things (although you can make great arguments for all of them, and many of them do contribute in some way.)

So what is it?

The magical #1 predictor of your future wealth is…
Your “savings”!

It’s true…that magical number between how much you produce on this planet and how much you consume on this planet (or how much you earn vs. how much you spend) is the single-most important predictor of your future wealth.

What You Produce – What You Consume = “Savings”

(And hopefully that “Savings” is a positive number!)

But wait a minute…what does “savings” have to do with the Maker Faire and with creativity and creation?

Let me show you…but first I need to go all kung fu on that horrid word, “savings”.

When most people think of “savings” they think of only the right half of the equation—“What You Consume” (or how to save on your expenses). They struggle over their budget, clip coupons to save on grocery expenses, pack their lunch instead of eating out, and otherwise try to be frugal.

This is not a bad thing, necessarily, but it is only half of the equation!

What You Produce – What You Consume = ?

It is time to redefine “savings”, much like Robert Kiyosaki redefined “assets” and “liabilities”.

(He said assets are things that put money into your pockets, and liabilities are things that take money out of your pockets, hence why your home is not an asset. Any homeowner will tell you just how expensive a house really is and how much money gets sucked out of your pocket each month to pay your mortgage, property taxes, insurance, maintenance, remodeling expenses, and on and on!)

On the same note, “savings” doesn’t fully explain the magic number equation, either—when you are “saving” money you are simply “not spending” it—it completely ignores the entire producing and earning and income side of the equation!

So, we need a new word to describe that magic number that is such an important predictor of your future wealth, one that accurately represents both sides of the equation, not just “expenses”.

Something like…

What You Produce – What You Consume = Your Stored Value

(or maybe Your Wealth Chest!)

You should constantly be trying to maximize your stored value, both by creating more value and helping more people (which will earn you more income) and by saving on your expenses. (Both Yin and Yang are equally important!)

Hopefully, you are creating immense value for others by solving their problems, whether you own your own business and solve your customers’ problems or whether you have a job and solve problems for your employer, and hopefully you aren’t consuming more value than you’re producing. (But if you are, fear not…heck, even the government is trillions of dollars in debt!)

So what is then left over from all of this awesome value you’ve created and not spent?

Why the value you’re storing for the future, of course– your stored value, your wealth chest, the money that will become your investing capital and build your future wealthy empire!

I have to be honest with you—I almost titled this article “What to Do if You Suck at Saving Money”, and I hope by now the answer is clear—don’t focus just on “saving” (which is really “how not to spend money” or “how to save money on your expenses by paying for them more cheaply”). Instead, focus on your income, too—on creating value for other people, just like the Makers do!

And then, store up all of that extra value you’ve created by helping other people (congratulations!) and build your awesome wealthy empire!

Source: kungfufinance.com