Are you a pretty frugal person? If you aren’t spending much money, where are you putting the extra? Are you throwing it into your savings account? The retirement fund? Or, are you putting it toward some outstanding debts? Whatever the case may be, do you ever wonder where your frugal life will take you?
Does Wealth Come From Frugality?
Have you ever taken a drive to the rich part of town? Here in West Michigan, all of the wealthy people own property on the water. A couple of days a year, I’ll dust off my bicycle and pedal along the shoreline to look at the houses that are far out of my reach today. There are a multitude of million dollar properties on that route, and I have recently asked myself, “Is my frugal lifestyle going to allow me to purchase one of these properties someday?” Or, maybe a better question would be, “Are these people wealthy because they’ve been frugal all their lives?”
For some, sure, they’re probably 60+ years old and they’ve finally amassed enough wealth to purchase one of those mammoth houses on the water, but I would say that for most of those homes were not purchased simply because they saved their pennies all of their lives.
“Many wealthy people are frugal, but just because you’re frugal doesn’t mean that you’ll be wealthy”
Do you like the quote? I’d like to tell you that I got it from a very prestigious financial writer, but quite honestly, I just made it up. It makes perfect sense though doesn’t it? The book, “The Millionaire Next Door” states that most wealthy people with a net worth of $10 million or more are very frugal at heart. When they started making bank back in the day, they just decided not to increase their lifestyle. Rather, they invested their surplus into the market or other business ventures. Their frugality allowed them to become wealthy.
This may sound like anyone that’s frugal will be rich, but that’s just simply not true! If you hardly make any money to begin with, there isn’t much money that can be saved, and therefore, not much money will be earned from that small surplus in your lifetime. If you are frugal and can increase your savings from $50 to $200 a month, that’s all well and good, but you won’t be buying a $2 million dollar mansion with your frugality!
How to Become Wealthy
If I continue to work my day job and never received another increase in pay, I could get through life just fine. I may even be able to buy a little cabin up north and a boat to relax on, but I don’t think a mansion would be in my future either (when I say mansion, I just mean ridiculous wealth, whatever it may be that you’d like to spend your money on). So if that is my goal, how do I need to alter my lifestyle today to earn my wealth in the future?
Start Your Own Business
What is your plan? Do you currently work a job that allows for very little surplus? Maybe you’ll need to start a side-business for some additional revenue. Just think, you could start a small business for practically nothing and earn an additional $1,000-$2,000 per month. Within just 3 or 4 years, you could be investing in your first rental property for cash! Keep reinvesting your earnings into more properties, and your total business equity could grow into $1 million in just 15 years!
Frugality and the development of an additional income is key to become wealthy. Do you have a plan for your future wealth?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.