The (Not So) Surprising Secret to Wealth

When was the last time you watched a financial program with Jim Cramer or Maria Bartiromo, and the suggested tip of the day was to calculate what percentage of your income you saved? If they have ever recommended this, I don’t recall; that doesn’t make great television… just as it is more exciting to believe there is a secret diet or ab belt that will lead to losing weight with no meaningful change in diet or exercise.

Without a doubt, the most reliable way to build wealth is to steadily and consistently save as high of a percentage of your income as you can. In other words, one of the most reliable predictors of wealth is one’s ability to delay gratification. Yet, GOBankingRates ran a survey with results depicting “sixty-two percent of Americans have under $1,000 in savings.” With eighty-five percent of U.S. adults feeling financial anxiety today, according to Northwestern Mutual’s 2016 Planning and Progress Study, this number comes as no surprise. Having done thousands of financial plans for clients, I have come to the conclusion that while investment expenses, taxes and strategy are important, if the person is not saving a reasonable portion of their income, they may not meet their goals. Below is what my team has found after helping build numerous financial plans over the years:

It is that simple. The next time you are logging into your account to change your investment mix or to obsess over the market, remember that changing your saving/contribution percentage may be a more powerful move.

While investments are an important part of the picture, they are just a part of the picture. A full pictured financial plan – one that builds wealth with investments and protects wealth with insurance – is what enables people to live life differently, with less doubt and more confidence. 

Article prepared by Wealth Management Advisor Ben Beshear with the cooperation of Northwestern Mutual. Beshear is an insurance agent of Northwestern Mutual based in Cincinnati. Email Ben at ben.beshear@nm.com. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wisconsin, and its subsidiaries. Joseph B Beshear is a representative of Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, Wisconsin (fiduciary and fee-based financial planning services), a subsidiary of NM and federal savings bank.