I was on some forum where someone said that if tomorrow everyone in the world was given $1,000 each -- and he said don't worry about where the money comes from, suppose it's just magic -- that many people would spend the money immediately on something frivolous, alcohol or gambling or fancy jewelry or whatever. Others who are more responsible would buy something of lasting value. But the wisest would invest it and a year from now have $2,000.
This person immediately got a storm of protest from people saying some variation of, Some people are so poor that they'd have no choice but to spend the money on immediate needs. They just can't afford to save and invest.
And I replied, That's why you remain poor. Because you refuse to consider how you might cut your expenses. You just insist that you are spending the bare minimum. You almost surely are not. Yes, there are some people in the world who are so desperately poor that every dime they get has to go to food or they will starve to death. But few people in America or Europe are in that position. Rather, we think that we just HAVE to buy convenient microwave meals instead of cooking from scratch. We just have to have a three-bedroom apartment because you can't expect our two children to sleep in the same room. We just have to have a new car because what would the neighbors think if they saw us driving that old clunker for another year. Or even, I just have to get coffee at Starbucks every morning because I don't have time to make coffee myself at home.
FWIW, here's my tip: Many people think they are being economical because they only buy what they need. The catch to that is, "need" is a very vague concept. It's easy to tell yourself that you "need" a new TV, or you "need" 3 bedroom house, etc. Ask yourself, "Will I die if I don't get this?" 99% of the time the answer is, of course not. It's not a need. It's a want.
People who build wealth don't buy what they need. They buy what they can afford. If you can't afford to buy a new car, then make the old one last longer. If you can't afford steak, then buy hamburger. Etc.
Don't think in terms of what you need. Think in terms of what you can afford.
I was on some forum where someone said that if tomorrow everyone in the world was given $1,000 each -- and he said don't worry about where the money comes from, suppose it's just magic -- that many people would spend the money immediately on something frivolous, alcohol or gambling or fancy jewelry or whatever. Others who are more responsible would buy something of lasting value. But the wisest would invest it and a year from now have $2,000.
This person immediately got a storm of protest from people saying some variation of, Some people are so poor that they'd have no choice but to spend the money on immediate needs. They just can't afford to save and invest.
And I replied, That's why you remain poor. Because you refuse to consider how you might cut your expenses. You just insist that you are spending the bare minimum. You almost surely are not. Yes, there are some people in the world who are so desperately poor that every dime they get has to go to food or they will starve to death. But few people in America or Europe are in that position. Rather, we think that we just HAVE to buy convenient microwave meals instead of cooking from scratch. We just have to have a three-bedroom apartment because you can't expect our two children to sleep in the same room. We just have to have a new car because what would the neighbors think if they saw us driving that old clunker for another year. Or even, I just have to get coffee at Starbucks every morning because I don't have time to make coffee myself at home.
And so you stay poor.
FWIW, here's my tip: Many people think they are being economical because they only buy what they need. The catch to that is, "need" is a very vague concept. It's easy to tell yourself that you "need" a new TV, or you "need" 3 bedroom house, etc. Ask yourself, "Will I die if I don't get this?" 99% of the time the answer is, of course not. It's not a need. It's a want.
People who build wealth don't buy what they need. They buy what they can afford. If you can't afford to buy a new car, then make the old one last longer. If you can't afford steak, then buy hamburger. Etc.
Don't think in terms of what you need. Think in terms of what you can afford.