These 3 Decisions Will Determine if You Become Rich or End Up Broke

When it comes to your financial life, many people focus on the small stuff like how much they are spending on lattes. In reality, this is not going to make that much of a difference in terms of growing your bank account (unless you have a really bad latte habit).

Instead of looking at these little things, there are three big decisions that will largely determine whether you become rich or end up struggling financially throughout your life. Here's what they are.

1. How much you invest

One of the biggest factors that determines if you'll end up wealthy or not is how much you invest in your brokerage account. When you invest money, that money starts to earn additional funds for you. If you get a 10% average annual return on your investment, then all of that money can be reinvested. Next year, you'll have a bigger pot of money earning returns, and your returns will grow exponentially.

To understand just how big of an impact investing can make, consider what would happen if you invested $100,000, earned 10% average annual returns, and never invested another dime. In 30 years, you would have $1,744,940.23. Your invested funds would have earned that much for you with little effort on your part.

To benefit from the compound growth that comes from investing, start putting money into the stock market as early as you can and invest as much as you can (aiming for around 20% of your income). If you can do that, you increase your chances of ending up rich, as long as you make smart investments and don't overspend.

2. How much you spend on your housing payment

Your housing payment will also have a huge impact on whether you end up rich or broke. Your housing costs are likely to be the biggest monthly payment you have. If you stretch your budget to buy a home you can't afford, that monthly payment is going to eat up so much of your money it will be impossible to do other things -- like invest so you can grow rich.

3. How big your car payment is

Your car payment is going to make a huge impact on your financial picture as well. That's because this is also a big monthly payment that can prevent you from having enough left to accomplish other things. If you borrow too much and keep upgrading your cars every few years so you always have a car loan, it's going to be a lot harder for you to avoid debt and get ahead financially.

If you can keep your housing payment to no more than 25% of monthly take-home pay and your car payment to no more than about 10%, you should be in a good position to have plenty of cash left over to invest. And those investments you're making should help you build the wealth you deserve.