According to Jaspreet Singh, an American financial expert and CEO of Briefs Media, there are three stages of wealth building that everyone should understand.
When thinking about wealth and financial stability, small daily habits are often overlooked as key factors for success or failure. However, Singh emphasizes that mindful spending plays a crucial role. He shares a story about his parents, Indian immigrants who, after decades in the U.S., decided to indulge in a rare treat: going to a café for coffee. Singh’s mother was surprised when the price of two cups of coffee and a dessert totaled $10, and adding another cup brought it to $15.
Singh uses this anecdote to introduce the concept of everyday expenses, such as coffee and tea—items many people consider trivial. He points out that such small expenditures can subtly drain finances, particularly for those who have yet to achieve financial stability.
“Be careful with small expenses. A small leak can sink a great ship,” Singh said.
In his program, Singh introduces three stages of wealth building, each with specific actions and priorities:
Stage One: Foundation
The first stage focuses on establishing a financial safety net by saving initial funds and eliminating high-interest debt.
For those in this phase, discretionary spending on branded coffee or tea is not just a luxury but a potential obstacle. Seemingly minor but frequent purchases can accumulate into a significant amount over time.
“When you’re not wealthy yet, avoid luxury coffee. Save that money to build a substantial savings,” Singh advises.
Stage Two: Building and Growing
Once the financial foundation is secure, the next stage involves creating a robust financial system. Singh recommends the 75/15/10 rule for managing income:
- 75% for daily expenses like rent and essentials,
- 15% for investments in stocks and real estate,
- 10% for savings to cover unexpected costs.
“If you’re at this stage, enjoying a Starbucks coffee can be reasonable, as long as it fits within your allocated budget,” Singh says.
At this point, Singh emphasizes focusing on the “Big 3” expenses—housing, transportation, and food—as they account for nearly 70% of an average household’s budget. These are the areas where cost-cutting can significantly boost savings.
Stage Three: Financial Freedom
In this stage, your income surpasses basic living expenses, granting financial freedom to enjoy life’s luxuries—like a premium cup of coffee—without financial stress.
Singh highlights that at this stage, small indulgences like coffee or tea no longer require deliberation. However, more significant financial decisions, such as purchasing a luxury car, high-end apartment, or expensive furniture, can still have a substantial impact on wealth.
“Wealth is not just about how much you earn but how wisely you spend it,” Singh emphasizes. Each cup of coffee or small purchase reflects financial priorities at different stages of wealth.
The essence of financial wisdom, according to Singh, lies in recognizing when and where to spend money. “Start by understanding your current financial situation, then make decisions that align with your income and goals,” he advises.
