You want to get rich, right? I want to get rich. Hell, we all do! That is the American Dream. Or something. In any case, building enough wealth to at least be secure and not stay up at night worrying about money is a great goal. So roll up your sleeves and let’s get started.
If you’ve never had money or are just one of those for whom money seems to be like water that just slips between your fingers and is gone, getting rich may only seem possible for those who win the lottery. Setting aside the part where many lottery winners eventually go broke, most people who have substantial wealth didn’t get that way overnight but built it up over time. I’ll share with you the very secret, complex, and magical formula for how they do that:
Earn > Spend
Translating that into English: Spend less than you earn, and save the difference.
To turn that into a (truly appalling) image, let’s think of money as water flowing through a pipe. The money you earn is the money coming into the pipe from the left and your spending is money flowing out on the right.
If you spend as much as you earn, then the water (money) just flows right through your life. You can see that as soon as you stop earning money, you’ll quickly have no money. (Hint: this is what most Americans do)
When you spend less than you earn, you start to build up a pile of cash. In our water example you might break your hose and blow water all over the place. Luckily with extra money building up the result is usually happier and a lot less messy.
Of course, there are lots of details that are getting glossed over here, like how to earn more money, how to spend less, what to do with the extra money you save, how to know when you’ve saved enough. I’m also not saying that it is EASY to spend less than you earn. That takes willpower and delayed gratification and other adult-y kind of things which we will cover later. However you can’t deny that on the surface, building wealth is SIMPLE.
The Best Is Yet To Come 