The Basics of Wealth

There are a lot of finance bloggers out there. Most churn out variations of the same advice over and over hoping to hook you into clicking one of their affiliate links and purchasing something from their sponsors.

Unlike the financial fat cats peddling their so-called free advice for clicking their links, I give you this advice for free with no affiliate links.

Everything to becoming rich boils down to these two rules:

  1. Spend less than you earn
  2. Invest the difference

Spend Less Than You Earn

This is the most important part of becoming rich. Are you spending more than you earn? You won’t become rich. Are you spending less than you earn? You might become rich but you certainly won’t be poor.

View this as a mathematical equation – You can’t spend less than you earn? Then earn more.

Don’t get caught in the trap that earnings are what you make at your job. Earnings also include money from investments. The more investments you have, the more you earn. That 3% dividend from a stock fund is something that will pay you back for the rest of your life.

Invest The Difference

The media tend to portray investing as a fat cat sitting in a chair, smoking a cigar, and picking stocks out of the newspaper. Investing is much more than that – an investment is the purchase of a thing that will make you money. Spending money is not an investment. Buying a car to show off or drive around is not an investment. Buying a car so you can get to work and make money is an investment.

Think before you invest. It is easy to rationalize something frivolous as an investment. You might think a $59 wallet is an investment because it will last “forever” and “they’ll fight over it when you are dead”. Realize that this marketing and they’ll fight over your wallet’s contents, not the wallet. A $12 1000 Denier wallet (no affiliate link!) will last just as long and the $47 you save will go far in your investments.

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