Five Decisions that can Make or Break Your Financial Future

You weren’t born rich.  You didn’t win a million bucks in last week’s lottery (and, odds are, you won’t be next week’s big winner, either).  You’re not a CEO, a movie star, a pro athlete, or a rapper with a multi-platinum album.  You’re not Warren Buffet, Bill Gates, or Oprah Winfrey.

And you know what?  That’s okay.  You don’t have to be any of those things to enjoy a secure financial future.  You don’t have to earn a six- or seven-figure salary to have a sizeable savings account.  In fact, what you do for a living (and how much you earn for doing it) has very little to do with your ability to build wealth.

At the end of the day, it doesn’t matter how much money you make or what you do for a living. In fact, you might be surprised to learn that your ability to build wealth can be predicted by five key life decisions:

Life Decision 1:  Getting Married

I’m sure you’ve heard the much-repeated fact that married people are much better off financially than their single counterparts – and it’s true, in most cases.  After all, it’s much easier to pay the bills when you’ve got two incomes instead of one.  Countless studies show that, in general, married people build more wealth – and build wealth faster – than single people of the same age and background.

So . . . if you want to build wealth, get married.  Sounds simple, right?

Before you go rushing down the aisle with just anyone, you should keep in mind that this fact only applies to successful marriages.  While a happy marriage can lead to all kinds of economic benefits, an unhappy one can be detrimental to your bank account.  Divorce is costly, and people who get divorced not only end up worse off financially than married people — they also end up worse off than people who never got married in the first place.  Marry the right person, for the right reasons, and you’ll reap the benefits.  Marry the wrong person for the wrong reasons, and, well, the only person who benefits is your divorce lawyer.

Life Decision 2:  Going to College

We all grew up hearing that a college education meant a secure future, a good job, marketable skills, and a solid place in America’s middle class.  But as more and more young people are graduating from college and struggling to find work, is a college education still the best choice?

In general, yes.  Even though the job market is tough for recent college grads, it’s even tougher for young people without a four-year degree.  College graduates may not enter the workforce and immediately land their dream job and an amazing salary . . . but according to the U.S. Census Bureau, college graduates usually make twice as much as much money as folks who didn’t go to college.  In the long run, people with college degrees build up more personal wealth – and some studies have even linked a college degree to a longer life span, greater self confidence, and better health!

The bottom line:  Will a degree mean more job opportunities?  Will the long-term benefits of a college education outweigh the rising costs of attending a four-year college or university?

In most cases, the answer is still going to be a resounding “yes.”

Life Decision 3:  Being Your Own Boss

It seems that, for every story we’ve heard about a self-made millionaire who built an empire selling cupcakes, pizzas, athletic shoes, or whatever else you can think of, there’s another story of someone who lost everything by starting their own business.

There’s something appealing about the idea of working for yourself:  You get to set your own schedule, you get to call the shots, and you don’t have to answer to anybody.  But those same things are what makes the idea intimidating – if the business fails, you lose more than just a job.

Most small business owners build considerably more wealth than folks who work for other people.  And even though you’ve probably heard the scary statistics about how many small businesses close up shop every year, they’re no scarier than statistics that show how many people get laid off or downsized from regular jobs.

My advice: If you dream of opening your own business, go for it – after you’ve done all of your research, of course.

Life Decision 4:  Building up Your Savings

The key to building wealth?  Saving money.

That sounds obvious, but when you consider how many people don’t have money in savings, I feel like I should mention it.  I’ve said it before, and I’ll say it again:  Pay yourself first.  Every paycheck.  No exceptions.  Pick an amount.  Make it $20.  Make it $200.  Just start saving.  You’ll probably be surprised at how quickly it builds up.

Do I need to say more?

Life Decision 5:  Buying a House

When it comes to personal finance, buying a house is a lot like getting married:  It’s a good decision, but only if you do it for the right reasons.  A home is a good investment if you can afford it.  Historically, homeowners have a greater net worth and more personal wealth than renters.

Of course, this only applies in situations where the homeowners aren’t in over their heads.  If you’re considering buying a home, ask yourself a few questions:  Do you have a down payment?  Can you afford the monthly mortgage payments?  Do you plan to stay put for several years in order to build equity?

If you answered “yes” to these questions, a house is a good idea.  If you answered “no” to any of them, you might want to keep renting for a few years.