December 4, 2021
Money might not grow on trees but there are a few things about building wealth that can be learned from the way trees grow.
The tallest trees don’t grow overnight. It takes a specific set of circumstances for a tree to be able to access and store enough resources and energy to reach great heights.
Step 1: Grow roots with your habits & mindset
No tree will get anywhere without good roots. Roots are the tree's foundation and one of its main sources of nourishment. When it comes to money and building wealth, habits and mindset on money are your roots. Believing in your ability to learn and grow into your vision of financial success is essential to any sustainable growth. Someone with little wealth can use their mindset and habits to grow a fortune just as much as someone with a lot of wealth can see it vanish with the wrong mindset and bad habits. Do you identify as a saver? Do you tend to try and keep up with the Jones’? Are you comfortable with risk? These are the types of questions that can lear to better self-awareness of your own financial habits and mindset. Stop to take into account your beliefs and tendencies stemming from your mindset which might be helping or deteriorating your own wealth and start building your foundation for long-term growth.
Step 2: Feed your capital reserves
Next, the tree’s roots need a certain amount of water to nourish it and help it grow. Not all trees need the same amount of water to stay alive. With no water, the tree eventually dies With the right amount of water, it can flourish. For the purposes of building financial wealth, capital is your water. The way you manage and allocate your financial capital will have a great impact on your ability to create wealth. It’s not simply the income you earn that will determine your success, it’s what you do with that income that matters most. Just like the tree needs to properly manage its water supply and reserves in the case of a drought in order to survive and grow over time, it is important for you to create your own capital management plan early-on to build enough wealth to sustain your spending when your income decreases or stops.
Step 3: Grow your capital reserves
Lastly, energy from the sun can take small roots with enough water and grow it into a giant tree over time. The trees that grow the most are usually the ones who received a good amount of sun over several decades. The returns you earn on your invested capital is the sun to your financial wealth. Just like the amount of sun separates small trees from big trees, the way you invest your capital can be a significant factor in your quest for sustainable growth. Earning enough on your investments can prevent outside events like lifestyle inflation and unexpected financial needs from depleting your reserves while you still need them.
Understanding and building on these three simple rules can have a lasting impact on your ability to build financial wealth. Get a clear understanding of your financial habits and mindset, which can influence your ability and willingness to save and invest capital, which can influence how much wealth you are likely to build over time.
Author:
Marcel LeBlanc, CFP®, CIM® is a Financial Planner and Associate Portfolio Manager with Louisbourg Investments. You can find more from him on Facebook and LinkedIn. Comments or questions may be submitted to Marcel at marcel.leblanc@louisbourg.net, or he may be reached at (506) 383-5204
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This writing is for general information purposes only and is not intended to provide legal, accounting, tax or personalized financial advice. If you are not sure how to proceed with a request for further information, seek help from a professional. Any opinions expressed are my own and may not necessarily reflect those of Louisbourg Investments.