Getting the Financial Wind at Your Back

by Jeff C. Johnson

Stack of coins with clock in background

There’s nothing better than the feeling of having the wind at your back. Imagine how a tailwind makes a brisk walk, running, or biking so much easier! For certain, it’s better than having stiff headwinds!

The same is true in your financial life. Getting the financial wind at your back as soon as possible makes life, marriage and career… all easier!

Most people have two wealth-building “engines.” The first is the work they do and the earnings they generate. If they can keep their expenses less than their earnings, they build savings and financial capital. This is where most of us must start.

The second engine—and one that’s potentially more powerful—is when the earnings on your accumulated assets and financial capital are greater than the interest cost on the capital you’re borrowing (for example, your home mortgage, student loans, and other debts).

When you get to the point where both of these engines are firing on all cylinders, where you’re saving money from your earnings but you’re also earning more from your accumulated money (your financial accounts and investments) than the cost of money you have borrowed, your “net worth” grows at a much more rapid rate.

Typically, this doesn’t happen to someone in their 20s or maybe even 30s, though it can with the right plan of action.

The relationship between your earnings and the amount you save is almost entirely dependent on your lifestyle. If it’s expensive, equal to or greater than your net earnings, well, no savings. Some Americans go through life this way.

However, if you accumulate savings and investments with positive returns and pay off or reduce loans and debts, whittling down interest costs, your capital starts to work for you!

Getting the financial wind at your back is important to consider, and plan for, at every stage of your financial life. Set yourself up to seek higher earnings from your work, eliminate unnecessary expenses, and build savings and investments. Be wise in how your build your investment portfolio, add to your accounts, and pay down your debts.

Get both your financial engines, your human capital (career and earnings) and your financial capital (investments and savings), working for you. This is when the financial wind is at your back.

If you’re ready to get started putting the wind at your back, read a copy of my book The Five Financial Foundations and learn about its “secret” wealth-building formula. This book and others I’ve written are offered for sale on my website and on Amazon.