Your financial independence is based on your ability to grow earnings.

Recently, we were speaking with a client about a potential home purchase. This purchase would shake up their current financial picture and even their current asset base. They have a large brokerage account that could assist in their purchase.

So, naturally, I jumped into the planning software and essentially deleted the entire balance of the brokerage account from their plan. This allowed us to realize the extent to which this nest egg was driving their probability of retirement success.

Surprisingly, it had almost no impact on their retirement projections.

Now, you might be scratching your head like, “How can they maintain their retirement projections when you remove nearly $500,000 in assets that were earmarked for retirement?”

It is this simple. They are incredibly aggressive savers. Like, 5-figure-a-month type savers.

Their entire financial plan is driven by their ability to continue saving, not so much on what has been saved thus far.

For any young professionals without a large nest egg, this should feel wildly reassuring. You will get there; it just takes time and effort.

This act of increasing your savings is something that should be in the back of every young professional’s mind. I usually pose it this way:

A 500% gain on $1,000 gets you to $5,000.

A 10% raise on $50,000 increases your income by $5,000.

Which seems more doable? Which seems more sustainable? Which seems more practical?

I know for me personally, increasing earnings will go way further than skipping meals to get an extra $50 each month invested.

Your ability to grow your earnings to then further your investments is a driving force behind your ability to accumulate wealth. Growing your earnings looks different for everyone. For some it is grinding at their current job for a promotion, for others it is taking a step back from the professional world and furthering their education.

In either scenario, the end goal is increasing one’s earning power. You can only save and invest so much before you find yourself miserable, pinching every penny and allowing money to rule your life.

When we work with clients, we focus on things that move the needle. A $5 coffee a few times each week isn’t moving the needle. Starting a business, getting a promotion, or furthering your education are examples of needle movers.

This is where I choose to spend my time, knowing that the more I earn, the more I can save. The big picture stuff, you know?

At the beginning of your career, it can be tough to put aside a lot of money. This can change over time if you build the right habits around your money and career.

So long as you increase your savings rate before inflating your lifestyle, you can win every single time.

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Have a more specific question or want to get your finances in order? Feel free to reach out to [email protected] for a free consultation!