Saving money vs. building wealth, what’s the difference?

YES! Make that money. Be proud of your ambitions. But remember:

Working = you making money. Investing = money making money. Put yourself to work, sure, but also put your money (savings) to work. It’s the faster way to life goals of being worry-free and living it up.

 Save:

• Put away extra $ that you don’t need today but will need soon to pay for life (rent, gas, food)
• Put where? Easy-access bank accounts
• No risk (pretty sure banks keep your $ safe), so super low interest, which = super low returns for you

Invest:

• Put away $ that you likely don’t need for 3-5 (or more) years aka  time horizon 
• Put where? Investments that you think will GROW IN VALUE in the future, like stocks and bonds
• Higher  risk  because no guarantees. Stocks you buy may grow in value or may not 📈📉

So, 2 things to commit to memory: ALWAYS negotiate your salary (we’ll help on HOW, just planting the seed here first) and INVEST the extra $ you negotiate for yourself.

Making the numbers real

Let’s say your first full-time job offer is $40,000 a year and you successfully negotiate an extra $5,000. (By the way, it’s a known fact that guys negotiate their salaries and ask for raises more often than women. That’s why there’s a gender pay gap.)

Let’s also say the $5,000 can be icing on the cake for you (meaning you don’t NEED to spend it on living expenses):

If you invest JUST that all in stocks...

In 10 years the $5,000 would grow into $12,968. More than double (almost triple)! For doing NOTHING, including NOT adding a cent more to it (which of course you WOULD do).

(based on the stock market’s average annualized return since 1926)         

If you keep that in a bank...

In 10 years the $5,000 would grow into $6,095. $1K more is not nothing, but meh. And this is best case scenario (meaning, with the BEST savings accounts that pay the top end interest rates!)

(based on average interest rates on savings accounts)

So that’s the difference between “saving money” and “building wealth.” Or, the difference between you making & saving money, and your money making money. We're developing mental muscles with you on investing basics here. And, if you want to see us make the difference between saving vs investing even more real, this simple chart says it all.