Why you should prioritize investing over being frugal.

Hi friend,

I wanted to share my thoughts on why I think you should prioritize investing over being frugal. To be honest, you can only trim your budget so much.

One thing I’ve learned on my wealth-building journey is that being thrifty/frugal and paying down debt is not the fastest way to increase your net worth and eventually become financially independent.

Rather, it is by prioritizing wealth-building habits like investing and increasing your income. Investing is the catalyst you need to skyrocket the assets portion of your net worth statement. By increasing your income, you can enjoy your money along with increasing your savings rate.

Whether it's real estate, your personal business, the stock market, or cryptocurrency, the level of appreciation just can’t be compared with paying down debt or simply spending less. I know your mind is telling you something else, but just hear me out for a second.

Your money literally works overtime on your behalf when you invest. I like to say your money does backflips when you invest. When we began this journey we focused on paying off debt and being frugal. This not only caused a lot of tension in our home but it just wasn’t as fun when compared to investing and increasing our income. We worked hard on ironing out our careers to ensure a steady income. We now prioritize investing and have increased our net worth by over $300k in just 3 years.

When we focused on being debt-free, we only increased our net worth just a little over $120k by only investing up to our employer match in our 401k. The increase in our net-worth occurred due to the power of compounding interest. As Einstein said, he who understands compounding interest earns it and he who doesn’t pays it. Your debt is literally someone’s asset. Why should you prioritize paying someone else before you pay yourself first?

Now I’m not saying you shouldn’t pay down your debt. What I’m saying is, you shouldn’t prioritize that over investing. A good portion of your extra cash should always go to investing before paying down low-interest debt like your mortgage or student loans. High-interest debt (anything above 10% Interest) like credit cards and personal loans should be a top priority always. **Remember even credit card debt can be leveraged. Depending on what you are using it for, debt can help you increase your income. Whether it's taking a course or using it as start-up cost for a business.

On that note, stay investing my friends ✌🏾

Dr. Boadu

CFB Financial Coach, LLC