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When it comes to becoming wealthy, most people have more power over their financial situation than they realize, Miranda Reiter, a financial advisor for Raymond James told an audience at Pasco-Hernando State College’s Porter Campus at Wiregrass Ranch.

And the good news is, that no matter how old you are, there are specific actions you can take to build your wealth, added Reiter, who worked in the banking industry before she became a financial advisor.

While she was working at the bank, she observed there were some people who always seemed to be financially fit.

“There are five things that I’ve noted that, if you can keep these five going, you can be on a

good path, a solid path, to building your wealth,” she said.

Before they can build their wealth, people need a clear picture of their financial situation, she said.

Knowing your net worth is a good starting point, she said. To determine that, add your assets and subtract your liabilities.

“Law No. 1 for building your worth is knowing how much it costs to be you,” Reiter said.

“I had two clients come in a few weeks ago. Married couple. Husband, 65, and wife is a little

older.

“Together, they bring home $150,000 a year. They’re both looking to stop working sometime

soon. They came in with $400,000 in their 401-k. The husband looked at me and he says, ‘Miranda, are we going to make it? Is this enough?’

“I couldn’t answer that question.

“People want to know this all of the time. Are we going to be OK, can I make it?

“I can’t answer that question because there’s a piece of information about him that I don’t

know yet. This information was, ‘How much does it cost to be you?’

With today’s technology and medical advances, people may live to be 100.

The question is: “When you think about the next 35 to 40 years, how much money will it take for you to live?”

Unfortunately, people often don’t establish savings goals based on how much it costs them to live.

“If you want to know how much it costs to be you, the bank statements that you get will

normally not lie. I tell people, print three out.

“There are some fixed costs that you know,” she said, listing off rent or mortgage payments, car payments and insurance.

“There’s other things that are more difficult to know, like how much you spend at restaurants?” she said. Check your credit card or debit card statements to get a general idea, she said.

In some cases, Reiter said she has to tell people: “Given the situation, there’s some changes that we need to make because what you have saved does not support how much it costs to be you, right now.”

“Law No. 2 for building your wealth: Eliminate your debt,” Reiter said.

This can be challenging, she said.

“If you’re looking to tackle your debt, what’s missing in most people’s lives is a strategy,” Reiter said.

“Most of us have debt. I’m not going to stand here and say that debt’s bad. As a matter of fact, most of us have used debt to bring ourselves up in the world.

“When we think about debt, we have to think, what’s a good debt and what’s a bad debt?” Reiter said.

Good debt, she said, “are debts that elevate you.”

“Credit cards are bad — if they’re being used irresponsibly,” she added.

“If you’re paying off your credit cards every month I generally think that you’re in a good

place,” she said.

“Here’s how you know, if perhaps you have a problem with debt: If you have credit cards and

you can’t pay them off every month,” she said.

That’s a sign that you need a strategy, Reiter said.

She recommends writing down your debts, writing down the balances and the interest rates.

Then, work to pay down debt with higher interest rates, first, she said.

Once you minimize debt, you’ll have more to save, Reiter noted.

To help avoid the temptation to spend more than you have, she recommends: “Why don’t you try not using your credit card, and using your debit card?

“It’s the same money, but there’s something psychological with us that credit card money is like

not real money, and debit card money is real.

“I know personally, it (using a debit card) helps me,” Reiter said.

Law No. 3 for building wealth, she said, is “spend less than you earn.”

“If you’re feel like you’re spending more than you’re earning, I’d say, ‘Take a moment to do

some conscious spending,’” she said.

Law No. 4 for building wealth, she said, is to “save and grow your money as early as possible.”

“I want to address something that people often ask: Should I save more or should I pay off my debts?

“Usually, it depends upon your specific situation. But I can tell you, doing both is possible.

“Every penny saved on credit cards, is a penny earned,” Reiter said.

To truly build wealth requires investing your money.

You can save $1,000 a year for 40 years and end up with $40,000, she said. “But investing that $40,000, assuming a rate of about 6 percent, will yield $164,000.”

Law No. 5 for building wealth, Reiter said, is to “get a plan.”

People don’t become wealthy by accident. They have a road map for putting themselves on the path to wealth, she said.

“I wholeheartedly believe that we have to be intentional about our money and our finances if

we want to change it, if we want to grow our wealth,” Reiter said.

Miranda Reiter’s five laws for building wealth
No. 1: Know how much it costs to be you.
No. 2: Eliminate your debt.
No. 3: Spend less than you earn.
No. 4: Save and grow your money as early as possible.
No. 5: Get a plan.

Published June 29, 2016