I’ve known quite a few folk who wonder what the secret is to accumulating wealth. For the purposes of this post, I’m defining wealth to include property that has value to others as well as currencies that others will accept as trade for some property or service.  If you don’t have property or currency,  in order to obtain something you want or need from some other person that has laboured to produce that thing, you either need to steal it, borrow in order to obtain, or trade some of your time for it.


Of course, we’ve already discussed that your time is the ultimate currency that you have.  If you purchase a pack of smokes for ten dollars, and you make ten dollars an hour, you are essentially saying that the pack of cigarettes is worth one hour of your labour and time.

The only way to begin accumulating wealth is simple.  Start saving. If you don’t save and spend everything you have with every paycheque, then when something goes wrong - the car breaks down or the TV needs fixed, it is likely you will go into debt in order to have it repaired.  Going into debt is the opposite of accumulating wealth (generally speaking as we’re not discussing leverage or buying on margin).  When you go into debt, not only are you responsible for the amount you are indebted for, but also you will pay back accumulated interest.

Some folk have a mindset that they can’t save. Sure, they can put a few bucks away each pay day into a savings account, but the day before payday, there’s a nice tempting outfit sitting in the shop window that you “just have to have.” There goes the savings account.

A solution to this is to find a way to force yourself to save in such a way that it is a hassle for you to get at the funds.  The time it would take to release your money to you in order to purchase the snazzy new outfit gives you enough time to have second thoughts and you start the self-discipline process and repeat that, over and over.

It was about 12 years ago when I was flat broke, had debt up to my eyeballs, and I knew I needed to do something if I was every going to have any chance of retiring comfortably, let alone financially independent.  I also knew I lacked self discipline to put away a portion of my income each payday on my own. I also knew I really didn’t have the recommended 10% each pay day to even put away - my debts and obligations were so high that there wasn’t much left over at all.  But I knew I could do a little better as far as my spending habits.

I knew I could find $25.00 a month.  But psychologically, that seemed pretty useless - where would $25.00 a month get me?  It would take so long to accumulate anything at all on that amount!  But I had to start somewhere and I needed to find a way where it would not be tempting to me to just easily withdraw $50.00 the second month because it was such a small amount, and I really wanted to have something badly at the moment.

I did some research on what in Canada is called an “RRSP,” or a Registered Retirement Savings Plan.  I could have chosen to open one up at my local bank account and simply deposit cash into it each month, but I also knew that in the long term, a mutual fund would likely increase at a better rate than the interest rates the banks were offering.  So I spent about an hour researching a variety of Mutual Fund companies - companies that invest in a variety of stocks, bonds and other financial instruments, and provide a means for individuals to “pool” their money together.

Most of the mutual fund companies required a minimum $100.00 a month, but I found one that required only a minimum of $25.00 per month.  At the time, I did not understand much about the different funds but chose a Canadian Growth fund, signed up and agreed to the company automatically withdrawing the $25.00 from my bank account each month.

After a year, I had an asset of over $300.00 - not much right?  But it was more than what I would have had if I had not started somewhere.  In addition to the asset of $300.00 plus the growth of the fund in that time, I also had an income tax receipt for $300.00 which allowed me to deduct $300.00 from my total earnings before taxes and then saved another bit of money on my tax bill.

Eventually, after I paid off debt and increased my income, I was able to increase my monthly payments into the mutual fund RRSP.  When I increased the payment, I also decreased my tax liability for the year.  And as my savings grew, I began to feel better about myself and that motivated me to work even harder to find ways to increase my savings.  It also had the effect of helping me become more disciplined in how I viewed money and the choices I made on what I would spend my money on.

And that my friend, is how to begin accumulating wealth.  By saving even just a little bit each and every month, and finding ways to increase the amount of savings regularly.

There are of course, many other factors you might want to consider when choosing a mutual fund to invest in and perhaps a talk with a Financial Advisor at your bank maybe helpful.  But I’d recommend to you that you not put off starting just because you don’t have all the answers or understand everything.  Start somewhere and keep at it.

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