5 Rules for Personal Wealth

The following research piece doesn’t tell us anything we don’t already know—it simply amplifies the issue as inflation continues to rise.

Over my 45 years of helping people manage their money, I’ve learned some simple yet powerful rules to build and protect personal wealth.

1. Protect Your Most Important Asset

Your house? Your car? Your bank account? No, it’s none of these. Your most important asset is your ability to earn an income.

Material possessions can be replaced as long as you can continue earning. That’s why disability and life insurance are vital—for you and your family—to protect this critical asset from unexpected interruptions in your ability to work.

2. Prioritize Your Health

Your health now and in the future is essential. Choose wisely what you put in your body. The insights in the attached article challenge conventional wisdom and could make a significant difference. Read More

3. Pay Yourself First

While tipping at a restaurant is customary, consider this: If you’re willing to tip someone else, why not "tip" yourself first? Start by saving 10% of your income and work your way up to 25%. Planning for the future doesn’t mean sacrificing all adventure in life—it just means being intentional. Take advantage of tools like TFSAs, RRSPs, and First-Time Home Buyer Savings Plans to let the government help you save.

4. Own Appreciating Assets

Invest in assets that grow in value. For those that depreciate—like cars—consider leasing or buying used. Avoid impulse purchases; chances are, you don’t really need them. Keeping that money in your pocket will serve you better in the long run.

5. Avoid Credit Card Debt

Never buy anything on a credit card that you can’t pay off at the end of the month. With interest rates of 22% (after tax!), carrying a balance is an insane cost of money. If you must finance something, arrange a line of credit at a lower interest rate (5–6%) and pay it off as quickly as possible.

Following these rules will help you stay self-sufficient through both good times and bad.

Dennis

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