Category: Financial Wellness

What is wealth? Ask around and you’ll receive all sorts of answers. Some definitions of wealth are textbook, others controversial, and many are quiet and personal. Wealth, as it turns out, is a very difficult thing to measure.

Personal Definitions of Wealth

Person A: Material Wealth

Scroll social media, and wealth often means having a big house, an expensive car, and extravagant trips. It might mean dining at top restaurants whenever you please, splurging on a $1,000 bottle of champagne, or having a closet filled with designer brands.

Person B: Independence Wealth

Others desire the freedom to walk away from a job without financial worry — often referred to as “FU money.” Is your boss unbearable? FU money grants the freedom to confidently say, “I don’t need you.”

Person C: Time Wealth

Some view wealth as the freedom to choose how they spend their time. It may align with owning their own business, a concept we’ve discussed here at Break Out Money Guys. To these individuals, true wealth is doing what you want, whenever you choose.

Person D: Relational Wealth

The most noble explanation — one I personally resonate with — is relational wealth. This means having family who love you, friends who enjoy your company, and the freedom to spend meaningful time with those who matter most.

Different Types of Wealth: What Do You Value?

If wealth is measured based on what people value, and people value different things, how can we answer what wealth actually is?

• Person A values material wealth because they associate significance and status with physical possessions and their monetary worth.
• Person B values independence and control, desiring financial independence to avoid being subjected to authority or values they don’t share.
• Person C highly values their time, acknowledging time freedom as life’s most precious resource. Who truly wants to spend their days on menial tasks when more fulfilling activities exist?
• Person D places the highest value in relationships. For them, relational wealth is paramount — marriage, family, friendships, and community take precedence over material possessions.

Despite their contrast, each perspective is tied together by one critical element: value.

The True Meaning of Wealth at Break Out Money Guys

Wealth isn’t measured by the amount of money in your bank account, but by the life you choose to live each day. What your life demonstrates — directly or indirectly — is a powerful and overlooked indicator of your true wealth.

That’s why our conversations at BOMG often venture into areas like discipline, mindset, relationships, and worldview. David and I ground our wisdom in a biblical perspective on wealth. Our worldview isn’t just rooted in our faith — it’s the very foundation everything else is built on.

You might disagree, and that’s okay. If we didn’t genuinely believe our thoughts were of value, we wouldn’t be sharing them. Our perspective may appear unconventional or even countercultural — but so is what the Bible teaches.

Reflecting on Your Personal Definition of Wealth

Whether or not you share our beliefs, I encourage you to take some time to reflect on what matters most to you. In today’s fast-paced environment, soul-searching is rare. We crave quick insights and fast-food wisdom. But if you’ve read this far, take a moment to pause and ask yourself:

• What do I want my life to be about?
• What am I truly building toward, and is it worthy of my effort?
• If everything I’m chasing becomes reality tomorrow, will I be fulfilled?

You may discover that the goals you’re pursuing aren’t as satisfying or meaningful as you expected. True wealth, after all, is simply possessing what we cherish most.

I came across a financial hot-take today:

“You will make more money by working really hard and getting promoted at your office job than doing a bunch of side hustles.”

It’s a reasonable point. Plenty of would-be entrepreneurs buy a domain, open an online store, boost a Facebook post, and then quietly let the whole thing fizzle. But what about the people who stick with it? Should they instead channel that energy into climbing the corporate ladder?

Paychecks vs. Ownership

Most American families rely on a paycheck. Salaries, hourly wages, pensions, or Social Security checks sustain the vast majority, especially the bottom 90% of earners, whose income comes primarily — if not exclusively — from labor.

But the game shifts at the top. The highest-earning 10% earn much more of their wealth from assets they own rather than the hours they work. Real estate, stocks, and private businesses generate returns that far outpace wage growth. Risk-taking, it turns out, often pays better than productivity alone.

Americans know this. Social media is littered with complaints that the system is broken — the American dream is out of reach for the majority now. Instead of complaining, ask yourself how you can use the system to your advantage.

The Real Payoff of Owning a Business

Business ownership is at an all-time high. By 2022, one in five American families owned a private company. Yet ownership is far more concentrated among the wealthy: nearly half of families in the highest income bracket own businesses.

For those looking scale their hobby into a successful business, the statistics are there. Solo business operators pull in median incomes around $85,000 annually. Add a few employees (between two and five), and that number jumps to $135,000. But the biggest jump occurs with businesses that have six or more employees. These owners, on average, earn around $237,000 annually.

Beyond annual income, owning a business also contributes to wealth. On average, households that own businesses have net worths two to seven times higher than those that don’t. Even single-employee business owners out-earn typical employees. Business ownership offers additional strategic advantages, such as control over income timing, tax planning, and more effective retirement strategies.

In short, business ownership offers leverage, scalability, and direct equity in the growth you create. Most people won’t take the time to explore their options, but these also aren’t the people starting businesses.

Why Ownership Often Wins

The U.S. economy consistently rewards risk more than hard work alone. From 2021 to 2022, business income grew almost twice as fast as labor income, according to the Congressional Budget Office. While wage-dependent households spend more hours just to keep up, those with ownership stakes watch their assets appreciate.

Jobs can offer stability, but only until inflation outpaces your income or your boss decides you’re too expensive. Long-term financial security usually requires owning at least one asset capable of growth. For many, this is property. But if you are savvy enough, a business is an excellent way to leverage your income.

By all means, work hard in your day job, but think about starting a business, too. It’s about investing in something that grows beyond your immediate effort and may lead to so much more.

A recent Bank of America study, Gen Z: A New Economic Force, forecasts that Gen Z will earn $36 trillion over the next five years — and $74 trillion by 2040. If true, they’ll be the richest generation in history.

But that wealth is based on income — not savings — and that’s a critical difference.

Despite higher earnings, Gen Z is also reportedly spending twice as much as they have in savings. For now, their income is helping them keep up — but for how long?

As spending habits shift and services like Buy Now, Pay Later (BNPL) become more common, the long-term impact on the economy is hard to ignore. Still, the bigger concern isn’t what’s happening on a national scale — it’s if you recognize these habits in your own life.

With so many people falling into the cycle of high spending and low savings, what can you do differently to stay in control of your finances and build stability for the future?

Spending Isn’t Just About the Cost of Living

It’s easy to blame high spending on the rising cost of living. There’s truth to that, but it’s not the only cause.

Look closer, and you’ll see that much of the spending gap — especially among younger generations — comes down to choices:

• $150–$225 shoes from brands like HOKA and On vs. sub-$100 options from Nike or competitors
• Ordering meals through DoorDash or Uber Eats instead of picking it up yourself
• Financing through BNPL as an alternative to saving

An occasional high-cost purchase isn’t the issue — and financing, in moderation, isn’t either. The real problem is what happens over time. These habits gradually widen the gap between income and savings, making it easier to grow comfortable with financial fragility.

The Wealth Effect Can Be Misleading

In economics, there’s a concept called the wealth effect — the tendency to spend more as income or assets increase. It creates a sense of financial freedom that feels real in the moment, but can collapse if the paychecks stop coming.

Real financial security doesn’t come from a steady paycheck — it comes from building assets that hold their value even if you lose your job:

• Robust savings
• A home
• A paid-off car
• Investment income

If your entire lifestyle depends on your income, you’re building a financial foundation on sand.

Discipline Is More Than Saying No

Financial discipline isn’t just about saying no to something you want. That’s a great start, but the next step is redirecting that money somewhere more meaningful.

Rather than letting extra cash sit in your checking account, consider putting it to work in a retirement or brokerage account, a high-yield emergency fund, or a separate fund for a major purchase.

At Break Out Money Guys, financial intentionality matters. In other words, don’t just practice restraint — spend with purpose.

How to Take Control of Your Finances

It’s easy to make these ideas sound good in theory — but how do you actually put them into practice?

1. Build a Budget

Before anything else, you need a budget. It doesn’t have to be complicated — just track your income, list your fixed expenses, and set clear goals for saving and investing. Build in a realistic category for flexible spending, like food and entertainment, so you don’t feel restricted.

The hardest part is simply getting started. But once you know where your money is coming from and where it’s going, staying on top of it becomes a lot easier.

2. Drop the Victim Mindset

There’s no shortage of commentary blaming other generations or politics for the state of the economy. Sure, the landscape has changed, but it doesn’t mean you’re out of options.

Waiting for the system to lend a hand won’t get you anywhere. Want to buy a house someday? It starts with small, intentional decisions right now.

3. Ditch the Hacks

Life hacks and financial tricks are everywhere — automatic savings, the envelope system, the latte rule. They can be helpful, but they’re just training wheels. The real goal is to reshape your mindset around money.

At some point, hacks won’t be enough. You’ll need long-term discipline — the kind that shows up when no one’s watching and spending is easy. That means learning to problem-solve on your own, not relying on trendy shortcuts.

True financial wisdom comes from choosing the harder road today to get to a better place tomorrow. It may not go viral — but it’s the kind of discipline that actually moves you forward.

What Warren Buffett Can Teach You About Wealth

Warren Buffett once said, “The biggest thing about making money is time. You don’t have to be particularly smart; you just have to be patient.”

Most of Buffett’s wealth came after he turned 50. He started investing at age 11, but it was decades of patience, discipline, and compounding that made him one of the richest people alive.

Take these principles seriously, and you’ll put yourself in a position most people — no matter their generation — never reach. Wealth isn’t built through tricks, hacks, or overnight wins. It’s built slowly, intentionally, and with a long view.

The sooner you start, the better.

If this article stirred a desire to take control of your spending, don’t ignore it. If you’d like to continue building a strong financial foundation, check out our podcast and explore our other financial wellness articles.

Roughly 60% of Coachella general admission ticket buyers chose to finance their passes through a payment plan — up from just 18% in 2009. That’s a troubling statistic — and it’s not just music festivals.

DoorDash and Uber Eats recently made headlines offering new payment plans for takeout. Yes, people are financing fast food.

Buy Now, Pay Later (BNPL) has become a modern way to buy something you can’t currently afford. But the convenience it offers comes with long-term consequences for how we think about money, spending, and debt.

A Brief History of BNPL

BNPL isn’t new. It began as layaway and has its roots in the early 1900s. Shoppers would put a down payment on a large purchase and make smaller payments while the store held onto it. Once the balance was paid in full, they could take it home.

These programs grew in popularity during and after the Great Depression when people didn’t have disposable income for large purchases. They were more akin to “pay now, buy later.”

What You Can BNPL Today

Today, the opposite is happening. Consumers get the product now and worry about payments later — even for small transactions. These programs may offer flexibility, but they thrive on instant gratification.

BNPL has found its way into nearly every industry: flights and hotels, clothing, groceries, video games, electronics, gym equipment, and even fast food. It’s now common to split up the cost of a new TV for Christmas, finance a computer or weight machine for your home office, or break up the cost of a Chipotle burrito after class.

This shift especially appeals to younger generations and low-income buyers, many of whom are more likely to feel financial pressure.

What’s Fueling BNPL Growth?

BNPL’s explosive growth comes down to two major forces: rising consumer debt and strategic business incentives.

Consumer Debt

Revolving Consumer Credit Owned and Securitized – FRED

Revolving credit — primarily credit card balances — has seen a sharp uptick, especially post-Covid. Consumers are carrying more debt than ever, and BNPL debt isn’t even counted in this data. That means total debt levels may be much higher than they appear.

As consumers become more comfortable taking on debt, BNPL is there to capitalize.

Business Incentives

Firms like Klarna, Affirm, and Afterpay are not offering buy now, pay later out of kindness. They are leveraging buyer psychology to drive sales. According to Klarna, using its service leads to a 23% increase in average order value, a 20% boost in conversion rates, and a 46% increase in purchase frequency.

These services exist to help businesses sell more. And because BNPL helps generate more revenue, businesses are going to continue taking advantage.

Risks of BNPL

Before making a purchase with BNPL, it’s important to consider the risks — many of which are listed directly on provider websites.

First, BNPL encourages impulse spending. Many consumers make purchases they would not consider if full payment were required upfront. The ability to delay spending increases the likelihood of buying things that strain their budgets.

Second, some plans come with hidden fees or deferred interest clauses. Retailers often advertise no-interest financing, but missing a payment or misreading the fine print can result in retroactive charges.

Third, BNPL fosters a false sense of financial freedom. Small recurring payments make spending feel painless, but it’s an illusion that disappears when multiple purchases convolute your budget.

Benefits of BNPL

BNPL is often marketed with several practical advantages, particularly for purchasers with limited access to traditional credit. For individuals with lower credit scores, BNPL can make larger purchases more attainable. And because payments are spread over time, they appear more manageable.

In some cases, deferring payment allows purchasers to keep cash on hand. For the financially savvy, that cash could be placed in a high-yield savings account or invested elsewhere, generating returns in the meantime.

Still, these benefits are only meaningful when BNPL is used responsibly. It is not a replacement for budgeting or saving. The most optimistic use cases come from consumers who are already in strong financial health.

Financial Flexibility or Folly?

In a world where almost everything can be financed, it’s worth asking a simple but uncomfortable question: how much are you already paying off?

Consider your current obligations:

• Subscriptions
• Streaming services
• Credit cards
• Deferred purchases

BNPL may feel like a frictionless way to buy now and sort it out later, but that ease is what makes it dangerous. Friction gives us a moment to pause, to question, and to weigh whether the cost is truly worth it.

Our mission is to challenge conventional financial thinking and equip you with the tools to make wise, tested decisions. We’re not here to sell you shortcuts — we’re here to give you clarity, discipline, and conviction. For more resources on managing money in today’s economy, check out our podcast and other stories.

The Federal Reserve isn’t just America’s central bank — it drives market moves that create opportunities for those paying attention. Following Fed headlines is common, but do you know why it makes certain decisions? Understanding how its mechanisms work can give you a significant advantage in positioning your portfolio.

Understanding the Fed’s Dual Mandate

The Fed’s dual mandate focuses on two key goals: keeping inflation around 2% and achieving maximum employment. These objectives directly influence asset prices and economic conditions.

Hot inflation

When inflation runs higher than anticipated, the Fed raises interest rates to cool spending. This higher cost of borrowing affects the market in observable ways:

• Growth stocks often struggle because higher rates make borrowing more expensive, which limits their ability to invest and grow.
• Financial sector stocks benefit because higher interest rates boost profits.
• Consumer discretionary stocks struggle as rising prices reduce consumers’ ability to spend on non-essentials.
• Energy stocks benefit as commodity prices soar.

Exception: Companies with strong pricing power can maintain profitability by passing costs to consumers without losing demand.

Rising unemployment

When employment weakens, the Fed lowers interest rates to stimulate growth. This creates a different set of opportunities:

• Bond prices rise when yields fall because older bonds with higher payouts are more valuable.
• Real estate investments do well as lower rates reduce borrowing costs for buying or developing properties.
• Growth stocks perform better because low rates make borrowing cheaper for expansion.

Exception: Companies dependent on consumer spending may struggle if unemployment remains high, regardless of rates.

How the Fed Manages Market Liquidity: RRP

The Reverse Repo Program (RRP) is a tool that the Fed uses to manage the supply of cash in the financial system. It allows financial institutions to lend surplus cash to the Fed in exchange for Treasury securities, helping control market liquidity.

Excess Cash

When there is too much cash in the system, the Fed uses the RRP to absorb it. Financial institutions park their extra cash with the Fed in exchange for Treasury securities, providing a safe return while reducing market speculation. This prevents overheating in financial markets that could otherwise inflate risky assets.

Tight Liquidity

When liquidity tightens, the Fed reduces RRP activity to increase cash flow into financial markets. Lower RRP rates encourage financial institutions to invest funds elsewhere. This increased cash flow can stabilize markets, but uncertainty often leads investors toward safe-haven assets.

Investment Strategies for Different Liquidity Environments

Understanding dynamic liquidity creates clear opportunities:

• Monitor RRP levels for shifts in liquidity conditions.
• Focus on cash-rich companies during tight periods.
• Consider safe-haven assets for portfolio stability when uncertainty rises.

How to Trade Around Fed Policy

Watch liquidity, interest rates, and market trends to find opportunities and manage risks.

Reading Liquidity Signals

Monitor liquidity through RRP levels and bank reserves — higher RRP usage signals tighter conditions that can reduce lending and investment.

Understanding Yield Curve Indicators

Watch the yield curve for economic signals; steepening suggests growth optimism while inversion warns of potential slowdowns.

Sector-Specific Trading Strategies

Different sectors respond uniquely to policy shifts. Rising rates tend to benefit financials through wider lending margins, while growth sectors face headwinds from higher borrowing costs. However, financial markets are nuanced and it’s not always a one-size-fits-all. Understanding these relationships helps position portfolios for opportunities while managing risks.

No investor’s education is complete without understanding the legacy of Warren Buffett. Known as one of the greatest investors of all time, Buffett’s track record speaks for itself. In 1965, he gained control of Berkshire Hathaway, a struggling textile company, for around $15 per share. Since then, he’s transformed it into a massive conglomerate, now trading near $700,000 per share. Since Buffett’s takeover, an investment in Berkshire has grown at nearly double the rate of the S&P 500, delivering returns over 140 times those of the index.

While there is much to learn from Berkshire’s fundamentals and 60 years of growth, this article focuses on the psychology behind Buffett’s investment strategies. My goal is to help you think like Buffett and improve your own investing — not to persuade you to buy shares of Berkshire Hathaway. Let’s explore the principles and practices of Buffett’s investing.

Focus on the business behind the stock

Early in his career, Buffett invested in low-cost companies regardless of their underlying fundamentals. While his early investments paid off, he learned it was better to focus on companies with strong fundamentals, even if they cost more. He is famously quoted as saying, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

To be fair, Berkshire has the resources to acquire entire companies—and often does. While lay investors like us won’t make purchases on that scale, we can adopt the same mentality.

Here are three principles to help you put this mindset into practice:

1. Research and learn how to value companies

Buffett emphasizes the importance of investing like you’re buying the whole business. This means evaluating the company’s cash flow, product range, market position, and future potential.

Let’s be clear: thorough research takes time. It might be tempting to rely on social media or your favorite analysts for quick answers, but blindly following can be risky. If you can’t commit to understanding your investments, you’re better off sticking with an index fund.

The financial industry is full of mediocre personalities who can’t help when they’re wrong. If you’re trying to be your own financial advisor, you need to know the company you’re investing in through and through.

2. Think rationally and avoid emotional trades

Because Buffett’s strategy involves finding excellent companies at a fair price, he often misses out on big moves when he disagrees with the market’s valuation. A company’s popularity doesn’t make it a wise investment.

The stock market reflect expectations about the future rather than current realities, making the market speculative and unpredictable. Many companies rally on speculation or news, only to lose that growth later. Don’t let emotions or fear of missing out trap you in a bad investment.

3. Learn when to hold and when to let go

Buffett is often associated with a buy-and-hold-forever approach, but this doesn’t mean he always keeps his investments forever. For example:

• IBM: Held from 2011 to 2018. Buffett sold all shares after the company failed to adapt to new competition in the industry.
• Airlines: Held from 2016 to 2020. The Covid pandemic disrupted the travel industry, leading Buffett to exit all airline stocks by April 2020.
• Wells Fargo: Held from 1989 to 2022. Buffett sold his position entirely due to a loss of confidence in the bank’s leadership following its fraudulent accounts scandal.

In short, Buffett’s investment confidence comes from the company, not the stock price. If the underlying fundamentals change, it may be wise to reevaluate your position and make necessary adjustments.

Practice patience and trust the process

You may have heard one of Buffett’s famous quotes, “The stock market is a device for transferring money from the impatient to the patient.” This sentiment is often echoed in investing circles, but retail investors rarely follow it. The stock market can help you build sustainable, lasting wealth — but only with the right approach.

Covid fears in 2020 triggered a market-wide crash, with sectors like oil and transportation taking the hardest hits. Meanwhile, niche stocks such as Zoom and Peloton soared during the post-Covid recovery, and meme stocks like GameStop and AMC gained massive followings on social media.

As the dust settled, the market began to self-correct. Pandemic favorites tumbled from their inflated valuations while strong companies regained stability. Indices — especially those heavily weighted in tech — have all but erased any sign that the US entered a recession in 2020.

Continue learning how to invest wisely

Buffett bought his first stock at the age of 11, setting him on the path of investing. He earned a Bachelor of Science in Business Administration from the University of Nebraska and a Master’s degree in Economics from Columbia University. At Columbia, he studied under Benjamin Graham, who became his mentor and introduced him to the principles of value investing.

Buffett valued education from an early age, and today’s investors have unprecedented access to information. With vast libraries of educational materials at our fingertips, we have resources that past generations of investors could only imagine. We should not let it go to waste.

Reading books, analyzing financial reports, listening to podcasts, and watching videos are great ways to expand your knowledge and make informed decisions. However, it’s important to be cautious if you’re learning from social media personalities. I find that the most successful investors often base their strategies on lessons from the past rather than fleeting fads.

Understand Buffett’s aversion to risk

It’s important to understand Buffett’s current position and how it differs from the ordinary investor. In Berkshire’s most recent letter to shareholders, Buffett wrote:

“Extreme fiscal conservatism is a corporate pledge we make to those who have joined us in ownership of Berkshire. In most years – indeed in most decades – our caution will likely prove to be unneeded behavior – akin to an insurance policy on a fortress-like building thought to be fireproof. But Berkshire does not want to inflict permanent financial damage… Berkshire is built to last.”

Simply put, Buffett’s priority is now to the shareholders. He’s already built his wealth and now he needs to preserve it. To achieve meaningful performance, Berkshire would need to acquire substantial stakes or entire companies, but Buffett doesn’t see many opportunities out there.

Buffett’s aversion to speculative assets like Bitcoin and surging AI stocks like Nvidia should remind us to prioritize sustainable, value-driven investments over short-term speculation.