What are the metrics that matter for building and sustaining wealth?
Welcome to the first issue of Metrix that Matter, a weekly newsletter from WealthMetrix that helps you focus on what matters most for building and sustaining wealth. Every Saturday, we share an educational essay with actionable takeaways to guide you on your journey to financial independence.
We live in a noisy world.
Everyone has something to say and oftentimes, something to sell.
This is especially true in the world of finance. Financial media provides an endless supply of investment recommendations, product pitches, and advice that may or may not be suitable, appropriate, or even true for your financial situation.
To make matters worse, much of this content seems to have a singular goal of stirring up fear – fear of missing out, fear of falling behind, or fear of the future. Why? Because fear has a way of getting people’s attention.
The good news? There’s a better way to approach your finances, one that doesn’t require you to chase hot stock tips, time the market, or panic over headlines.
Instead, you can focus on what matters. You can focus on a set of measurements that actually make a difference on your wealth, a clear scorecard that shows exactly where you stand and what to improve next. These aren’t complex formulas or secret strategies. They are simple measurements anyone can track.
In this newsletter, I’m going to show you the framework I use to cut through the noise and guide clients to build real wealth. It starts with a simple sketch that changed how I think about money:
This is one of the most well-known illustrations by Carl Richards, creator of The Sketch Guy column in The New York Times. It gives us a filter for what to focus on: things that MATTER and things you can CONTROL.
Although this is a great starting point, how do you know where you currently stand and how do you know if you’re making any progress? You need a way to measure these things.
That's where metrics come in, a specific set of measurements that indicate your financial health. Just like tracking your physical health requires checking vital signs, building wealth requires tracking financial vital signs.
I use a system called Elements to easily measure and track these metrics. Elements gives you a complete picture of your financial health with just 11 key metrics.
You don’t need a finance degree to understand them either. Each metric is calculated using simple math and answers a simple question about your money.
So, what are these metrics? What should you focus on when it comes to your wealth?
After working with hundreds of clients, these 11 metrics consistently emerge as the vital signs that truly indicate financial health and actually move the needle on building lasting wealth:
Ultimately, these metrics help you answer four important questions that determine your financial success:
Do you have the right mix of assets? (Bottom row)
Are you using your income wisely? (Middle Row)
Are you taking the right amount of risk? (Top Row)
How much wealth do you need to make work optional? (Bottom Right)
Depending on your age and stage in life, some metrics are more important than others. But most importantly, each one represents something that matters, something you can control, something you can measure, and something you should focus on.
In the coming weeks, I will dive deeper into each of these financial metrics, which form your financial scorecard. I will explain what they are, how they are calculated, healthy ranges to strive for, and ways to improve your scores.
Although each metric represents a specific part of your financial life, they are all connected to each other. Once you understand these relationships, you will gain a better understanding of your finances and more confidence in your future.
Next week, I will explain the middle row of metrics: Savings, Spending, Debt, and Taxes. These four help you understand how you’re using your income. No matter what stage of life you’re in, having control of your income is crucial. These metrics have the power to both create and deplete wealth.
WHAT TO FOCUS ON THIS WEEK
List your top three financial concerns right now. Then rate each concern on a scale of 1-3 for how much it matters and how much control you have over it.
1 – Doesn’t Matter / No Control
2 – Matters Some / Some Control
3 – Matters A Lot / Total Control
Finally, identify one area from the Elements framework that you would like to improve.
Thank you for reading. At the end of each newsletter, there is an invite to use Elements to see your financial scorecard. If you are ready to gain more clarity into your financial situation, we invite you to click the link below to get started with Elements. You will be asked basic financial questions about income, spending, debt, and account values. The process takes about 10 minutes. Once complete, we will review your scorecard and send you an email to schedule a 30-minute phone call to discuss your situation, answer any questions you have, and see if there’s a potential fit to work together. This whole process is complimentary.
WealthMetrix
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Addison, TX 75001
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2moWhich metrics do you tend to discuss the most? Which ones do you discuss the least?