A recent study from Wells Fargo and Gallup found that approximately 21% of 401(k) participants take out loans or early withdrawals from these plans. Many employees are not quite familiar with the tax consequences that go along with such behaviors.
The basics of good money management, while not universally taught, can be identified and learned. Financial literacy is a necessary first step in ensuring individuals make sound financial decisions. However, it is only one piece of the wealth-building puzzle.
If we are to increase the likelihood of becoming wealthy, we have to understand and change how we behave with respect to areas that are, perhaps, a little more personal.
For example, individuals who focus intently on what others buy and consistently want the latest and greatest in technology, accessories, etc. are less likely to build wealth over time. Social Indifference, a wealth competency Data Points measures based on the research from The Millionaire Next Door, predicts net worth regardless of age, income, or how much wealth one inherits or is given. Those high on Social Indifference (i.e., those uninterested in what others buy or trends in general) have a higher likelihood of building wealth over time.
A comprehensive plan for building wealth, from a personal or client development standpoint, includes identifying and improving both financial behaviors/knowledge, as well as improving behaviors/attitudes in other areas of our lives that predict net worth.