12 Metrics We Use To Achieve Wealth
Estimated reading time: 11 minutes
To achieve wealth, you must bridge the gap between where your money goes, how much you earn, and what your future will potentially cost.
We want to retire early, and that means saving enough today to sustain the rest of our non-working life post-retirement.
Whether it’s people we have told about our financial success or on the blog, we’ve been asked what metrics we use to achieve wealth.
Basically, how do you do it?
Related: Creating Wealth From Zero Using Simple Financial Principles
Our neighbour laughed at Mrs. CBB when she asked what she was doing for the day, and she replied budgeting.
Her response was, “You’re always budgeting.”
Although not false, we don’t revolve our life around it and neither should you.
Wealth Is Not The Same For Everyone
I will start by saying that the term ‘wealth’ is overrated and vague.
What wealth means to one person often doesn’t reflect what others seek.
For example, while watching a YouTube video about homelessness in Canada, a man said that having a roof over his head was more important than anything.
How many of you take your cozy bed under a brick-and-mortar roof for granted?
Where the luxury of living indoors doesn’t peak on your radar, it’s a windfall for another.
Here’s another example but from the opposite point of view.
I can’t afford to drive a car, so I take the bus.
I’ve never taken the bus, nor will I ever, so I’m buying a car.
Having the ability to get a loan or to pay cash for a vehicle may be considered ‘wealthy.’
Related: How To Stop Lifestyle Inflation From Gobbling Your Wealth.
Stages Of Achieving Wealth
According to Charles Schwab’s 2023 Modern Wealth Survey, you need more than 2.2 million dollars in assets to be considered wealthy in the USA.
Interestingly, the report says well-being ranks higher than wealth since reduced stress = a happier life.
Money doesn’t always mean happiness, but we need it to survive.
The report claims that well-being—not money—is an important measure of wealth.
Nearly 70% of respondents said a healthy, flexible work-life balance is a greater driver of wealth than maximizing their earnings.
Looking back, it’s clear that achieving wealth progressed step by step.
A windfall, not even close, didn’t follow a base situation.
How We Were Able To Achieve Wealth
Let’s look at our timeline to get where we are today.
- Began University in the UK
- I bought a flat at 19 years old
- Graduated University
- Sold the flat for profit.
- I bought a semi in the UK at the age of 21
- New job, not in the field that I studied at University.
- I paid extra on the mortgage and worked all overtime.
- Split with my ex in 2005 and paid her out of the mortgage.
- Mrs. CBB bought a house in 2004 and sold it in 2006 for a small profit.
- I met a girl who lived in Ontario, Canada.
- We got married in 2006.
- I sold my UK house and moved to Canada in 2007.
- We rented a room for two years at $500 a month.
- Mrs. CBB finally paid off her 5-year 0% interest-free vehicle loan.
- The college accepted my application, so I returned to study for a new career.
- I had a full-time weekend job for my college study while attending school.
- After searching for months, I purchased my first Canadian truck and paid $14,000 cash.
- We bought a house in May 2009 (when the market crashed) for $265,000.
- The first major renovation to our home was a roof for $5700 cash.
- I kept working full-time at a job after graduating.
- Mrs. CBB lost her job months after buying the home.
- I was offered a part-time job working full-time hours + my other full-time job.
Buying Our First Home, Blog, Baby, Investments
- Canadian Budget Binder was born in 2012 to blog about our financial journey.
- We paid off our mortgage in May 2014.
- Our son was born in 2014, and we later discovered he was autistic.
- Mrs. CBB stays home to raise our son.
- I quit my full-time job to accept a better full-time position with defined benefits.
- We bought a second used truck for $47,000 cash and sold the first truck.
- Invest to top-up our RRSP and TFSA accounts to max them out.
- Continue to also invest in non-registered accounts and GICs.
- We opened a Life Insurance policy for our son.
- Begin significant renovations to our home. (The last major was the roof in 2009).
- Together we continue to achieve wealth by living a semi-frugal lifestyle.
- Budgeting continues to be part of our monthly financial journey.
Related: Statistics and Traps Every Investor Needs To Know
Bumps In The Road
Every step of the way, we achieved wealth by reaching short and long-term goals.
Don’t get me wrong, as there were setbacks in the timeline above, which were costly and continue to be.
With Mrs. CBB being sick and losing her job, we also lost a full-time income of nearly $60,000.
This happened months after purchasing our first home together in 2009.
Having a baby in 2014 also dented our wealth-building plans as we had to strategize our mission.
When we were told we’d never have kids, we planned our future together as a couple without children.
Although getting pregnant was a bump (no pun intended) on the road, it was welcome.
Building Wealth With No Children
At that time, we could achieve wealth faster based on our debt-to-income ratio and budgeting.
- We ate simple, inexpensive meals to prepare, such as tuna pasta salad. (lots of it).
- Using coupons for almost everything we purchased.
- Built a massive stockpile using coupons and discounts.
- Used rewards points to our advantage. (Mainly PC Optimum).
- Nearly all clothing, furniture, and accessories were purchased second-hand.
- I started a blog, but it didn’t earn my first $1000 passive income until years later.
When there was any chance to earn extra cash, it was a combination of working extra hours, focus groups, cash-back apps, coupons, taste-testing, market research, or thesis help.
Baby Impact On Building Wealth
Having a child comes with extra expenses that were not in our monthly budget.
We had to change how we distributed our money before our son was born.
Even after he appeared on earth, our budget continued to shift yearly.
We went all in, learning everything about saving money in Canada.
Reviewing everything we did to get to the place we are today, there were standard metrics we used to achieve financial independence.
Something that might sound strange to some of you is that we still use these metrics today.
Although we feel satisfied with our achievements, we know there’s more to learn.
Achieve Wealth At Any Age
There’s no right or wrong answer regarding wealth and age, but for the average person, the earlier you start, the better.
If you’re questioning your age and how becoming debt-free and achieving wealth would be impossible, think again.
First and foremost, you need to know realistically what “achieving wealth” means to you.
Unless you’re launching a business or in a career that becomes ultra-successful, building wealth takes time.
If you’re an everyday worker like me, you must understand your wealth moment.
- How long will it take to pay off debt and become debt free at your current age?
- What do you plan to do with the time you have after you become debt free?
This becomes your wealth stop because it has to be realistic.
Unless you plan to work for the rest of your life, you must set an endpoint.
Also, if you are fortunate to have this, passive income may follow you to the grave.
Passive income is money you earn while you are sleeping. An example would be this blog.
Just something to think about.
Metrics We Use To Achieve Wealth
Canadian Budget Binder
As the creator of the original Canadian Budget Binder a free printable 51-page downloadable finance tracking system, I’d be a fool to say we don’t use it.
Our Budget Binder is the overall bundle of what has gotten us from A to Debt-Free over the years.
I don’t think there’s a page in the binder that we don’t use, although some more than others.
Budgeting and tracking our expenses will never grow old as we know it works.
This is why I want my readers to understand that their success relies on the amount of effort put into the process.
It will take time to achieve wealth based on where you are financially coupled with your goals.
If you have a financial advisor set up a meeting with them to discuss your goals and timeline.
You pay for their services, so take the opportunity to get personal with your money as we did.
Passive Income Growth
Since I started CBB to educate and share our journey, it has earned me money.
My only passive income is Canadian Budget Binder, which earns a five-figure yearly income.
The money earned can grow or tank, and I can’t predict this, so I don’t count on it.
Thankfully, I don’t rely significantly on a blog as my primary source of income as AI technology shifts how media is delivered.
The emotional delivery is one thing AI will never take away from Canadian Budget Binder.
One of the biggest benefits of AI for bloggers is the ability to increase efficiency. With AI-powered writing tools, bloggers can write faster and with more accuracy.
This can free up time for other important tasks, such as promoting the blog or interacting with readers.
While there are positives to using AI for blogging, there are also drawbacks to think about. One potential drawback is that it can remove some of the emotion from writing.
Using AI-powered tools to suggest words and phrases can make writing sound artificial and unnatural.
The good news is that even if the blog earns something, it’s better than nothing.
Setting up some form of passive income will always benefit you financially.
Personal Inflation Rate
Your inflation rate falls on the guiding principle about what you buy and how much of your budget is allocated for the item.
For example, if you budget $1000 monthly for groceries but only spend $800.
Your inflation rate increase or decreases based on your spending habits.
As older parents of a young boy, we must consider costs that younger parents with kids have already paid.
How to calculate your inflation rate.
We’ve always tried to spend less than we earned for all our budget categories, hoping to stay below national average household inflation rates.
The personal average inflation rate is calculated in the same way but takes individuals’ spending patterns into consideration.
By entering your monthly expenses, it calculates your personal basket weights – or the proportion of your budget going to each category – and applies them to each category’s Consumer Price Index change.
Globe and Mail
Investments, Retirement, and Savings Rate
In 2019, we created a preliminary financial plan with our advisor, concluding that we would have $75,000 yearly to spend starting in 2041.
However, this figure is based on assumptions, and changes are imminent.
Since we are debt-free and have no mortgage, we may have more disposable income to invest.
For example, we had GICs that matured, and we’re now investing in bonds.
Our savings rate was growing, and the money wasn’t earning much in the bank.
Also, the figure below does not account for any blog income, as it was not factored in.
I can’t predict what will happen with Canadian Budget Binder in the future.
Another thing to consider is health which could decline at any time.
Save for your retirement as soon as you can, and remember to include investment management fees (MER) and to consider performance metrics.
Credit Score
Knowing your credit score is important even if you think everything is fine.
An annual credit report is a record of your credit activities in Canada.
Often we only dig into our credit history when needed, such as buying a home or opening a bank account or credit card.
The problem is that scammers or theft can compromise your credit at any time.
Spend the small amount of money it costs to get a copy of your credit report and credit score at least once a year.
Review the report, and contact the appropriate people if you see any concerning issues.
If someone does a credit report check and your credit score is not up to snuff, you may not get that loan or credit card you hoped to get.
Again, this comes down to knowing where you stand so there are no surprises.
Related: How to handle credit card fraud
Emergency Compass
An emergency compass contains everything about life’s “What ifs.”
Being prepared for emergencies such as needing a new furnace, job loss, or an expensive car repair.
Having cash set aside when you need money on the spot is imperative.
Preparing an Estate Will and planning your funeral is another life aspect that falls under the compass.
Having life insurance can also serve your family well during tough times.
Please don’t forget to consider what would happen if you need to go into an old-age home or long-term care, as the costs are very high.
You may wonder how this might add value to achieve wealth, but it’s significant when planning ahead.
Pay for what you need to pay for today so it’s not a financial burden in the future.
Conclusion
Overall, there will always be times when we look back and wish we had done something differently.
For example, when I started this blog, I wasn’t aware of how passive income worked and the amount of money I left on the table.
That’s ok because now I know and continue to learn, and that’s what personal finance and growth are about.
Let go of the negative notions and string together positivity and achievable, actionable goals.
Print my budget binder, set it up, and go for gold CBB friends; you’ll be glad you did.
Most of all, keep your head up high because you’ll achieve wealth be thankful you didn’t let yourself down.
Discussion: How many of you are happy you took a chance on your finances? In the comments, let me know what you’ve done that has helped you achieve wealth.
Talk soon,
Mr. CBB
