Some Financial Truths
- Higher income does not automatically mean more savings!! It does not matter how much you make, it matters how much you are spending. A person earning $200,000 can be just as poor as a person earning $20,000.
- Lifestyle inflation is the devil. The reason those $200k people are poor? They keep increasing their lifestyle as their income grows! You can’t build wealth that way. And who wants to keep “needing” to earn more to keep living?? (Now on the plus side, it should be much easier for a $200k earner to cut back than a $20k earner so the $200k earner has much more potential to dig himself out.)
- Saving doesn’t count unless it’s actually saved. If you buy a Ferrari for $300,000 on sale from $400,000, you aren’t actually saving $100,000. All you did was spend $300,000. (My wife used to pull this one all of the time, “Look hunny, I bought this useless widget for $20, it was on sale and I saved $10!”)
- It’s important to KNOW YOURSELF. Things like admitting to caving into lifestyle inflation. Knowing you need to be better about saving. Or maybe, saying it’s hard to read about finance when, “you just want to buy things and pretend the future will take care of itself,”. You have to be self-aware enough in order to make good change. There’s no sense in lying to yourself about anything, so start now.
- You have to keep experimenting until you find what works! This is why so many financial blogs exist – not because the information is any different (PS: it really isn’t), but because there are a million ways to get something done. We all figure it out at different stages in life, but we have to keep on trying new things until it finally clicks. You have to find the passion that keeps you moving forward.
- Nobody was born a natural saver or investor. Some may have been brought up into it at a young age, but that’s ok. Just because you were not doesn’t mean that you can’t get good at it. However, at the end of the day any of this stuff is do-able provided you want it bad enough.
- YOU HAVE TO WANT IT. Everyone wants a million dollars or to quit smoking or to shed 20 pounds and retire early in our youth. The difference between the people that “want” and the people that “get”, is their desire, their passion, and their willingness to step out of what they have always done to do something that may not seem natural.