Imagine you’re out for a stroll and cross paths with two individuals.
One is lavishly dressed in designer apparel and the other in generic brands.
Which of the two would most assume is wealthy?
Most would point to the lavishly dressed individual.
They would be wrong.
“Wealth” is often wrongly associated with hyper-spenders.
In the book “The Millionaire Next Door” America’s millionaires are asked three questions.
- Were your parents very frugal?
- Are you frugal?
- Is your spouse more frugal than you?
The vast majority of millionaires answered yes to all of the above.
This demands a paradigm change.
If wealth is rarely found with lavish lifestyles, what does it mean to be wealthy?
Wealth is not just earning a large amount of money. There are many people who earn a lot of money and at the end of the year find they have very little in savings.
Wealthy people are financially independent.
A key part of being financial independent is not depending on a paycheck to pay for your living expenses.
This provides you the benefit of avoiding stress and more freedom because you are not restricted to certain action because you haven’t been paid recently!
If the above sounds appealing, let’s outline the steps to becoming financially independent.
In order to be successful in the above plan you’ll need one more thing: discipline.
In order to have freedom, you must be disciplined.
What does that mean?
Spend less than you earn and invest the difference so it can grow over time.
Being disciplined can be particularly hard if you are surrounded by people who are constantly showing off their purchases, the classic “hyper-spender.”
But remember the benefits of being financially independent, no stress about money and more freedom, and use that as motivation to lived below your means.
Keep an eye out for future articles where we dive deeper into each of these steps.