One of the best things you can do to improve your financial health is to spend as if you earn less than you do.
Everyone who makes good money knows it. And that is a dangerous thing, because the more you make the more you feel you should – and can afford to – spend.
What retailer doesn’t enjoy welcoming high income earners to their establishment? You might have witnessed this before, where someone enters a high-end retailer with an air of arrogance or a sense of entitlement that “the world is their oyster”.
For those unfamiliar with that phrase it harkens back to Shakespeare’s play ‘The Merry Wives of Windsor’ when Pistol retorts to Falstaff after being told a penny will not be lent to him, ‘Why then, the world’s mine oyster. Which I with sword will open’. Act II, Scene II.
Those who believe that they can purchase anything they want are wrong. For those who earn $500,000 a year, there are many luxuries that are beyond them. For those who earn $1 million a year, there are many luxuries that are beyond them too.
In fact there is no limit to the amounts of money that can be spent in virtually every consumable category – whether it be food, land, housing, vehicles, boats, clothing, technology and furnishings. As soon as you think you’ve heard about the ‘most expensive’ widget ever, there’s another one coming along right behind it.
Most millionaires become wealthy by choosing to spend less than they earn for decades. By creating a lifestyle that is below their means, they are able to build up savings and investments, and eventually it adds up to over $1 million.
And it doesn’t take much – just $20/week for 60 years will do it. But even that simple example of how to accumulate $1 million requires that you never touch the growing investment account.
So, when you’re tempted to indulge in the latest luxury, give it a second thought and consider the alternative. Being selfish to your future self is about foregoing something today to enjoy tomorrow, and by delaying gratification you will build up significant wealth. Guaranteed.