Want to be rich? How about just being comfortable? Either way, there is one clear step you can take TODAY to get on that path: write down your financial plan.
Residents of Houston, Texas believe that it takes a $2.5 million net worth to be wealthy and $1.5 million to be financially comfortable. Are those the numbers you would pick?
The numbers above were reported in a recent survey conducted by Charles Schwab Corp., one of the largest brokerage firms and banks in the United States.
But for someone who is living paycheck to paycheck, the numbers could be much lower. Perhaps having a net worth of $50,000 might seem pretty darned comfortable, if not wealthy.
Since the median household income in Houston is $45,728, having more than a year's earnings as a net worth seems like a pretty good goal.
Sounds great, you think. And so what? How can I possibly get on that path, when I can barely make ends meet?
Well, the survey done by Charles Schwab in Houston shows clearly that those with a written financial plan are better able to (1) pay bills and still save each month (71% vs 40%), (2) have an emergency fund (57% vs 25%), (3) have life insurance (60% vs 43%), and (4) feel financially stable (55% vs 36%), than those without a written financial plan. And they are less likely to live paycheck to paycheck (45% vs 64%).
So, if you play the odds, it's MUCH more likely for you do to well financially by writing a financial plan than it is for you to buy a lottery ticket.
How do you do that? Check out NerdWallet for writing a simple financial plan - they advocate a 50/30/20 budget, which I endorse: 50% of your after-tax income for necessities, 30% for your wants and 20% for savings and paying off debts (and ultimately for investing). Or just do it on a sheet of paper and post it on the fridge.
Post in the comments below how easy or hard making a financial plan was for you.