Building up your net worth to the point that you’re “wealthy” is usually a conscious choice. It involves sacrificing some of the fun and experiences present-you will have for the benefit of future-you.
On the flip-side, choosing a life of “just getting by” is mostly a string of seemingly unconscious choices, they accumulate like votes about the direction of your financial future, even though there’s no overarching theme besides “living for today” and consumption, these micro-decisions being made daily lead to the “choice” of about 25 more years of mandatory work.
I get it, it’s not easy saying “no” to the abundance of fun things in life that act as little rewards to make all the hard work feel worth it, but when you add up all those decisions that contribute to your present “happiness” and extend them out into the future a big, unpleasant choice is being made passively.
It’s part of the game, without all the ridiculous excess the U.S. wouldn’t be such a rich country, there’s all this stuff we can buy and enjoy within a few clicks or for “low-low” payments that we can make work into our current budget, rationalize and stretch our finances thinly with.
Being aware is a great start to taking back control.
But keep in mind that our opponents are motivated, heavily invested, have thrust themselves into our lives in obvious—and not-so-obvious ways—and they like to win and for them “winning” means extracting more dollars from you and me.
These shrewd business owners are gladly delivering on all the growing wants we have, while the media is planting seeds to create more and more wants to keep the gears of the machine moving.
These players are getting extremely rich, while most of the people they’re selling to feel a temporary high and feel “rich” with their constant flow of new toys coming in the front door and the previous favorites leaving in a garbage bag shortly after.
We get used to almost anything (Google “hedonic adaption” to learn more), especially if it feels good, even if it’s perverse.
Even though your friend’s and neighbor’s lives might have the outward appearance of “living-large”, their net worths are tied up in depreciating toys, fleeting experiences, food & drink that’s over-hyped and digested by the next day. This is a recipe for living month-to-month and not being able to get ahead without a major change.
This major change doesn’t usually come…
And as the game keeps getting bigger and more expensive, reigning it in gets harder and harder as your life gets further away from a normal, modest life—which in comparison to the ridiculous normalized excess—starts to look and feel like deprivation (but it’s heaven).
Some ideas to counteract the misconception of who wealthy people are and what their lives look like is to learn about examples of normal people that are actually rich (not stars, influencers, CEOs of large companies or the likes):
- The FI/RE (Financial Independence/Retire Early) community is full of lots of examples where you can peek into their lives
- “The Millionaire Next Door” is a great book that was well researched over many years and clears up a lot of confusion about who millionaires are, how they live, how they got to where they are…
- If you’re fortunate enough to know wealthy people personally, it might be worth inviting them for a meal or coffee and having a real conversation respectfully asking them about their journey, plan, lifestyle, sacrifices, perspective, advice…
- Travel to or read up on less fortunate countries and realize your current lifestyle—assuming you live in the USA or another fancy 1st world country—makes you pretty rich relative to the billions and billions of people in 3rd world countries
One of the most useful numbers that’ll tell you when you’ll be able to retire—if you’re starting with $0 in savings—is your savings rate (%). It’s one of those simply elegant metrics that is so powerful because it cuts through the BS and focuses on the most important numbers… Your income and expenses. The difference between the two is your savings and when you divide your savings by your income you arrive at your SAVINGS RATE %.
Here are a few examples of various savings rates and the length of time it’ll take to retire:
Savings Rate % | Years Till Retirement
75% | 7 years
65% | 10.5 years
45% | 19 years
35% | 25 years
20% | 37 years
10% | 51 years
5% | 66 years
Pretty crazy how when just going from saving 5% to 20% of your income you reduce the time you have to work by 29 years. If your savings rate it 0% or negative it gets bleak. On the bright side, if you’re a super saver and save 65% of your income you’ll have the option to retire in a little over a decade.
The choice is yours, it’s not necessarily easy, but it’s pretty simple when you do the math. You’re at an advantage if you like numbers/math, but the math isn’t that complex and isn’t the hard part (even if math isn’t your strength you’ll be fine since you’re living during wonderful times, where we have so many great tools, apps, resources, and teachers to help and guide us).
The more challenging parts that need attention to succeed are your habits, thoughts, emotions, fears, social pressure… the stuff that’s in our heads or on autopilot.
With some adjustments, trial & error, and good examples in your life you’ll be surprised how quickly you can turn things around and start building wealth.
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