Home  Features Jobs & Business The smart route to wealth
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The smart route to wealth |
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By Brendon Turner » Bottom line. No exaggeration. No hype. If you
want to be rich in Canada, all you have to do is make a decision to do
something that most people don't do. And that's to PAY YOURSELF FIRST.
What most people do when they earn a dollar is pay everyone
else first. They pay the landlord, the credit card company, the
telephone company, the government, and on and on. The reason they think
they need a budget is to help them figure out how much to pay everyone
else so at the end of the month-or the year, or their working life-they
will have something "left over" to pay themselves.
This, my friend, is absolutely, positively financially backwards. And
because this system does not work, people wind up trying some pretty
strange ways to get rich.
When you boil it down, there are basically six routes to wealth in this country. You can:
- Win it
- Marry it
- Inherit it
- Sue for it
- Budget for it OR
- Pay Yourself First.
Let's quickly review each of these methods.
Win It: Can you guess the No. 1 way average hard-working people
try to get rich in North America? They play the lottery. In the US
alone, people spend more than $8 billion a year on lottery tickets. Can
you imagine if these same dollars had been invested in retirement
accounts?
Now let me ask you something else. Have you ever won the lottery? Do
you know anyone who has? Did that person share any of their winnings
with you? Exactly. So let this one go.
Marry It: How's this working for you so far? There's a saying
that it's as easy to marry a rich person as a poor one. Really? The
truth is that people who marry for money generally end up paying for it
for the rest of their lives. So let's skip this one too-unless, of
course, you really do fall in love with someone who happens to have
money.
Inherit it: This obviously isn't worth thinking about unless
your parents are rich. And even if they are, isn't there something a
little sick about visiting them during the holidays, asking how they
are, and then thinking "bummer" when they say, "I feel great"?
Sue for it: This one is big in the United States, where more
than three-quarters of the world's lawyers practice and upwards of 94
percent of the world's lawsuits are filed. But Canadians are becoming
more litigious too. While Canadians have usually left it to the
Americans to sue each other for spilling coffee in their laps or
abandoning the wheel of an RV on cruise control, some Canadians feel
that, rather than earn, save, and invest, a better strategy is find
'em. sue 'em, and sock it to 'em. In any case, it's not a real system
that can be counted on to build wealth.
Budget for it: You can scrimp, brown bag it, clip coupons, track
every penny you spend, never have fun, and put off living for thirty
years in the hopeful expectation that someday you'll be able to retire
and start enjoying your life. Yuck. That sounds terrible. No wonder
this rarely works.
This leaves us with the one proven, easy way to get rich. And that is...
PAY YOURSELF FIRST
Pay Yourself First means just what it says. When you earn a dollar, the
first person you pay is you. Most people don't do this. When most
people earn a dollar, the first person they pay is the government. They
earn a dollar and, before it even makes it onto their paycheque,
Canadians pay the government something like 30 cents in federal income
taxes (often more).
On top of that, there's the Canada Pension Plan, provincial health
insurance and employment insurance. In the end, they wind up paying the
government first as much as 35 or 40 cents of their hard-earned dollar.
Seems like everyone is getting paid but the person who earned the
paycheque.
The Secret is the Way Your Money Flows
You have a right to legally avoid federal and provincial taxes on the
money you earn. The key word is "legally". You can legally Pay Yourself
First, instead of the government, simply by using what is called a
registered retirement savings plan (RRSP).
You can hold a large number of investments in an RRSP.
Who You Work for is Waiting for You at Home
As much as our employers would like us to believe otherwise, the reason
most of us go to work each morning isn't the company mission statement
or even serving the customer. It's ultimately about us. When it comes
down to it, the reason most of us go to work is for the sake of
ourselves and our families. We go to work to protect those we love.
Everything else is secondary. We are our first priority.
Or are we? The truth is that we are not raised to put ourselves first.
We are raised to be nice. We are raised to share. We are raised to help
others.
These are wonderful values, and I believe in them. But there's
something else I also believe: the old saying that God helps those who
help themselves. I think there is timeless truth in this.
So before you start laying out a financial plan, really focus on these
questions: Are we helping ourselves? Are you helping yourself? Are you
REALLY working for yourself? I'm not asking if you're self-employed.
I'm asking whether you're really working for your own benefit and that
of your family when you go to your job each morning.
Related:
Home business opportunities
Small business opportunities
Visit InvestorGazette.com
for articles about retirement income planning for the individual
investor. The Investor Gazette is a weekly edition of investment
properties and investment opportunities.
Source: EzineArticles
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