Wealth, by popular belief, is a matter of how many dollars get into your account every month. Though to an extent this may be true, there is one key exception to this rule, and the failure to understand it has led many people down the path of personal and financial destruction.
Building wealth is achieved through disciplined utilization of resources at our disposal; by making sure that we spend less than we earn. Becoming rich is not really about the size of your paycheck; it is more about the amount from your salary that you put aside as savings or investments.
It is easy to get stuck in a rut; millions of people living in debt are a clear testament to this fact. For most, the problem starts on the day they bag their dream job. They mistakenly think that this is the time to make all their dreams come true.
The next thing they are negotiating a mortgage with their bankers, taking a loan on a new car, and plunge themselves deeper into credit card debt through impulsive spending.
From this point on, every ‘dream’ slowly reveals its ugly face; it turns into a scary financial nightmare.
‘Your life’ is your job. The job dictates whether you sleep on the street at end of your next mortgage repayment period or not. The job determines whether your car gets repossessed when your next loan repayment is due or not.
People who supposedly helped you bring your beautiful dreams into reality turn into ghosts that haunt you every month with debt repayments.
You made one simple mistake: you spent more than you earned, period. At whatever level of income, this is living above your means, and it almost always results in loss of financial independence.
The key to staying away from this kind of trouble is saving and investing.
The first simple lesson on saving is checking on your daily spending and cutting back on non-essential items on your budget. This may seem hard at first, but take pride in the fact that you are buying your way into a future of financial freedom.
Moreover, with smart investment decisions, you will most certainly in future afford you a better life than you can afford now, with the added incentive of a peaceful mind born of financial security and freedom.
The bottom line is, as long as you spending more than you make, you are getting poorer each day. The converse could not be truer: if you are spending less than you are making, then you are becoming richer.