Achieving personal financial success, and acquiring a certain level of net worth, are the result of carefully executed strategies over the long term. Concurrently, Canadian businessman Greg Aziz noted that North American economic cycles can influence the course and outcome of both endeavors.
Greg Aziz explained the multiple steps involved in achieving financial self-sufficiency. He also shared insights on reaching an individual’s desired net worth.
Financial Success: A Different Meaning for Each Person
The term “financial success” implies a well-defined threshold that everyone aspires to cross. However, Greg Aziz pointed out that financial success means something different for everyone. Stated another way, being financially successful enables an individual to achieve other lifestyle goals.
Comfort and Convenience
Sufficient financial resources enable a person to live in an uplifting home in a safe neighborhood. Comfortable furniture and furnishings help to enhance the experience. Outdoor landscaping, and perhaps a water feature, may add to the ambiance.
Plenty of Free Time
With no need to adhere to a daily work schedule, an individual can pursue their hobbies and interests as they wish. They’re also free to conduct business affairs at their convenience rather than waiting in annoying long queues.
Personal Security Implementation
By nature, an individual wants to keep themselves and their family safe from multiple threats. With generous financial resources, the person can implement strategies and partner with experts to bring this goal to fruition.
Sustained Peace of Mind
A financially successful individual has prepared for unexpected circumstances, and they know they have the resources to handle them. Greg Aziz emphasizes that this mindset fosters a sense of confidence and personal satisfaction.
Multiple Milestones on the Journey
Each person will traverse certain milestones on their financial success journey. At different stages of life, an individual may want to have purchased their own home or paid for each child’s college education. Alternatively, perhaps the person wants sufficient financial resources to enjoy extensive travel.
Naturally, each person’s life circumstances (and perhaps their financial circumstances) will change as the years unfold. Their milestones may vary accordingly, likely requiring adjustments along the way.
5 Key Steps to Financial Success
Becoming financially successful requires a series of steps, each of which complement each other. Greg Aziz explains that an individual will likely be engaged in multiple steps at any given point.
Focus on Needs Rather Than Wants
With immediate gratification frequently the norm, many people think their “wants” are also their “needs.” However, making the distinction between the two concepts enables an individual to buy a functional item rather than one with all the bells and whistles.
Greg Aziz takes a bigger-picture view, noting that the concept of “living below one’s means” is still alive and well. Although it may be inconvenient now, maintaining a disciplined spending approach will enable an individual to achieve their financial goals.
Prioritize Automatic Savings Plans
An automatic savings plan is the best way to build financial resources. On each payday, automatic deductions can funnel into several important accounts. These savings vehicles include an emergency fund, an employer’s retirement account (ideally with matched funds), and an investment account. Automatic savings plans ensure that an individual’s targeted savings can’t be diverted to discretionary spending.
Contribute to an Emergency Fund
Financial emergencies typically don’t happen at convenient times. Vehicles break down and need expensive repairs. A medical issue sidelines the household’s primary breadwinner for several months. A sink pipe breaks and floods an entire floor, with insurance only covering part of the repairs.
Greg Aziz notes that households with an emergency fund would ideally have enough resources to resolve each issue. An emergency fund should (at a minimum) contain six months’ income in a readily accessible account. A low-risk savings account, other cash account, or U.S. Treasury bonds or notes are desirable options.
Individuals should avoid putting emergency funds into a tax-advantaged retirement account. These funding vehicles have restrictions on when (and how) individuals can access the account’s deposits.
Balance Investment Risk and Reward
Every investment has a distinctive risk/reward profile. To illustrate, beginning investors often prefer common stocks, mostly due to the easy investment entry and exit. Historically, investors who bought the right stock at the right time reaped substantial rewards.
However, other individual investors lost significant amounts of money. Some stock investors took a different path, channeling their funds into a professionally managed portfolio with a proven track record.
Although every investor seeks a good return on their invested funds, bigger potential rewards entail bigger risks. Investors should define their risk tolerance before embarking on an investment program. For guidance, an individual should invest no more than 10 percent of their assets in a single investment vehicle.
Maintain a High Level of Financial Awareness
Throughout an individual’s financial success journey, they should remain aware of relevant economic news and financial markets developments. By having a Certified Public Accountant prepare the household’s taxes, an individual can ensure that they take all legal deductions and income adjustments. Finally, Greg Aziz says they should consider working with a qualified financial advisor who can provide guidance on investment strategies.
The Concept of Net Worth
Every individual has a personal net worth. Stated as a simple equation, a person’s net worth is the total of their assets minus the total of their liabilities (the total amount they owe).
Determining a person’s net worth helps them to better grasp their current financial situation. It also enables them to quantify their progress toward preset financial goals.
In a real-world example, assume an individual makes an above-average income but has an excessively high number of bills. This person will have a relatively low net worth. Having the hard facts at their fingertips may spur them to review ways they can decrease their bills and/or increase their income.
5 Ways to Elevate a Person’s Net Worth
An individual can use several integrated tactics to improve their net worth. Greg Aziz says these strategies are applicable to people in every income bracket.
- Decrease Food, Transportation, and Household Expenses
- Keep Current Vehicles on the Road Rather than Buying New Ones
- Increase Applicable Retirement Plan Contributions
- Retire All High-Interest Debt
- Consolidate or Renegotiate Loans
The North American Economic Climate’s Role
No one conducts their financial affairs in a vacuum. Stated another way, the North American economic climate influences everyone’s personal financial situation and their investment choices. Depending on the degree of concern, individuals may decide to change their financial management strategies.
In April 2023, North American consumers are still concerned about inflation’s impacts on their wallets. Increased expenses and higher interest rates, along with minimal savings, are causing stress in many income brackets.
Bank failures are one of North American consumers’ biggest concerns. Financial institutions have long been regarded as rock-solid places to put personal and business funds. Several recent bank failures, with potentially more on the horizon, may be eroding consumers’ confidence.
Greg Aziz Recommends Regular Financial Reviews
As economic and financial market conditions evolve, individuals’ financial situations are also likely to change. Greg Aziz recommends that consumers regularly review their finances, ideally with a qualified financial advisor familiar with their household’s situation. Based on the latest data, the person can update their financial strategies and remain on a productive path.