We More than Tripled our Net Worth in Less than Seven Years - Here's HowJan 15, 2024
In the complex landscape of personal finance and building generational wealth, the pursuit of wealth often involves more than just dollars and cents; it's a journey that intertwines emotions, behaviors, and aspirations. Another layer in this landscape is navigating the journey with another person who has their own financial beliefs, personality, and tendencies.
Tripling Our Net Worth in Less than Seven Years
In this post, I will outline the journey that my husband and I embarked on seven years ago that has resulted in more than tripling our net worth. Before I delve into the FOUR key practices we used, I will share a little about us. We are currently dual income W-2 workers, one in social services, the other in the local electric municipality. About 5 years ago, I dropped down to part-time W-2 work and started a small private practice. We have one child and are working toward paying off our mortgage. We do not come from generational wealth but do benefit from privileges, both Caucasian, and paid for undergrad for me. My husband did not attend college. We mostly utilized savings vehicles through our jobs to amass our wealth. The practices we employed are simple and cost little money or financial skill. They were purpose and intention focused. However, over the years, we sought out and gained a lot of personal financial knowledge, skill, and confidence. Five years ago, I became aware as a mental health clinician, the importance of the intersection of money and emotions and focused my private practice on Financial Therapy.
Understanding Our Money Stories
Just as individuals have unique life stories, each person has a distinctive "money story." This narrative is shaped by our upbringing, experiences, and the beliefs instilled in us over time. My husband and I both came from divorced families where money was tight. For me, my mother was the primary financial caregiver. And although we had enough to cover the basics but there was ALWAYS money stress, a lot more no's than yes's which made me feel deprived. As an adult, I know and understand we had so much more than I thought but my experience doesn't discount the feelings and sense of scarcity that I experienced from early childhood to young adulthood. This money scarcity was imprinted in me and shaped me as an adult, especially how I thought and felt about money in relationships. Thinking about sharing money with my husband and having someone else have a say was difficult for me to accept. So, my husband and I talked about it in many different ways. We were vulnerable in sharing childhood experiences, we listened to books, we listened to podcasts, we shared our dreams and we evaluated how each other spent and saved money. We cultivated financial intimacy. It was transformative as I understood him and he understood me. In the process we created trust and this moved us to the next step where set financial intentions for our marriage.
Setting Financial Intentions
Rather than focusing solely on monetary goals, my husband and I considered the emotional and lifestyle outcomes we wanted to achieve. For me, it was financial security, for him it was early retirement in order to pursue his passions. At that point, we realized we would be saving more than we would be spending in order to achieve our goals. However, we didn't want to deprive ourselves of a fabulous life together so we got really clear on what we would spend money on. For me it was a safe neighborhood, adventures, and travel, For him it was nurturing his passions which include biking, photography, cars, fixing things, and anything else that caught his eye along the way. This man who could barely put together a frozen meal is basically, in my assessment, now a 5 star chef with all the kitchen tools. Our purpose was clear but our timeline was short. With every goal, there should be a timeline. My husband wanted to retire at 50. We had 10 years to make it all happen.
Tracking and Budgeting our Money
Often, couples are not sure how to "combine" their money. For us, we kept it simple, with a shared checking to pay household bills, food, and transport. We had a shared Savings Fund which acts as our Emergency Fund. We each had our own savings vehicles, again, mostly through work but I had a Roth IRA I started back in graduate school and an overseas Tax Deferred savings vehicle having worked in New Zealand for seven years. Those have never been combined, however, we listed all of our accounts and their balances on a simple home made excel spreadsheet to track our Net Worth.
Net worth is your assets minus your liabilities. I have included the exact one we have used over the last six years for your reference or use HERE. We do include our house in our Net Worth. We update the tracker on our monthly money date, a set time we come together to see how we are doing and progressing towards our goals. This is the single key tool and practice that has helped to keep us on track. I recommend this wholeheartedly. Tracking our net worth gave us a money history of what was happening month to month. It helped us with our relationship with money, loving it through the good and the bad times. Emotionally, it focused us, promoted trust, reduced stress, and built our financial confidence over time.
Spending and Savings Plan
Building financial security and working towards early retirement requires a base understanding of your incomings and outgoings. We sat down and documented our salaries and expenses. We adopted a No Budget, Budget. More info on the No Budget, Budget HERE. We knew that we had to save a significant portion of our income. For us, our savings, which is taken from our checks before it hits our checking account was about 20-26% in order to fund all of our savings goals. The remainder of our income after taxes was what we could spend on our fabulous yet intentional life. Over the past 7 years, we have not strayed from this approach. It is essentially a set it and forget it approach. As our incomes increased from raises and bonuses (3-5%), both our savings and our spending also increased to accommodate cost of living and inflation (although this last year has been extremely tight - thank you super inflation!).
Savings and Spending Plans aka Budgeting is often seen as a restrictive exercise, however we used it as a tool that showcases our values, or how we want to live our life. We view it as an empowerment tool. Over the years, there have been urges to spend up on things but our budget, laden with our values and goals grounded us and we carried on. However, we have spent on luxury items during this time. Read about it HERE. Having a plan, informed by our life values, has supported us to make decisions about lifestyle, work, travel, and family.
Adopt a Save/Invest and THEN Spend Mindset
Having set our intentions for our fabulous life together, and adopting a save then spend mindset, we needed to identify how we were going to save and invest our money. Both my husband and I are W-2 workers, so we used our organizations retirement vehicles to save. This is where my financial literacy increased and I started looking at, understanding, and absolutely 100% optimizing our retirement vehicles and work benefits. We both have pensions offered through our work. Yes! However, a pension, we learned, is not always necessarily a sure thing as we have seen them take different forms or be taken away in other industries. For example, in my organization, a few years ago, they decided to take away the Defined Pension Plan where you receive monthly annuity payments for life and turned it into a Cash Balance Pension. A Cash Balance Pension is where you receive a chunk of money based on numbers of years worked and percentage of salary. Um, that is a massive huge change for some employees who worked for decades thinking that this Defined Pension Plan was going to be a sure thing for their retirement.
Ultimately, we knew that we could not depend solely on the pensions so we took advantage of the other vehicles offered us which included a 403b, 401k, a 457b, and, just recently, a High Deductible Spending Plan. I found that in addition to the Cash Balance Pension, my organization contributes $1,000 towards my 403b per year. Being in health care, my health insurance is fully covered, with minimum co-pays vs my husbands which would cost several hundred per month. We doubled up on vision and dental coverage because it was cost neutral. We each have Long-Term Disability Insurances available to us that provided for us up to the age of 65. I paid for the Legal Insurance Benefit the year we set up our Family Trust. We have the standard life insurance provided to us by our companies. However, we pursued Term Life Insurance outside of our organizations as we wanted the coverage to be attached to us and not our organizations. We took advantage of all discounts offered by our organizations and aligned with our lives such as phone and gym.
In summary, net worth growth is often a result of consistent, positive financial habits. Talking about money, establishing routines like tracking your net worth, cultivating a save then spend mindset, automated and optimizing your savings, and regular financial check-ins can contribute to long-term financial success. By making these habits a natural part of your life, you create a sustainable foundation for wealth-building.
In the quest to increase your net worth, remember that the journey is as important as the destination. By approaching your financial well-being with a values first mindset, you can foster a healthier relationship with money, align your actions with your values, and build a foundation for lasting prosperity. Embrace the process, be patient with yourself, and enjoy the transformative power of mindful financial living.
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Photo by Any Lane
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Mariah Hudler, MSW, MBA, CFT-I™ is a therapeutically informed financial wealth & wellbeing coach. She works with individuals, couples, families, entrepreneurs, groups, and organizations to make Wealth & Wellbeing a joyful part of life.
Disclaimer: This blog is for education only. Please consult with a qualified professional when you have any questions about your personal financial, tax, or legal situation. Information contained in this post is for informational purposes only and not intended to replace professional advice.
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