To accomplish great things, we must not only act, but also dream; not only plan, but also believe. — Anatole France
I grew up without money. I always thought about how some people have a lot of money, and some have nothing.
Why does a person need billions when a person can happily live with merely 0.005% of a billion?
I started to learn from books, articles, magazines, personal finance gurus, Reddit discussions, quora answers, you name it.
Trust me; I lost a lot of money while searching for the importance of money and why I need money. I could have invested that money.
However, the journey has been incredible.
In this article, I’ll share what I learned. Learning is also a continuous journey. No doubt, all successful people make learning a sustainable habit.
However, along the way, I picked up lessons that completely changed my views on money.
If you want to live happily and debt-free your whole life, you need my grandma’s rule about personal finances.
Don’t spend more than you earn! That’s it.
Also, learn the difference between bad debt and good debt.
I keep adding more ways to earn. One source of income is not enough in today’s economy. People are losing jobs all the time. Layoff is the norm.
Tool
I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer. — Jim Carrey
Implant this concept in your brain that money is a tool, not an ultimatum to happiness.
Before moving to North America, I used to think making $5000 or even $1000 was a considerable amount of money.
All I need to do is find a way to make $5000 per month to live a happy life.
Now, I make much more than that, but it’s like a never-ending journey.
Sure, it can provide comfort, security, and the chance to chase our dreams.
Money alone cannot give you long-lasting happiness and peace of mind.
Focus on developing strong relationships.
Magic trick
Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it. -Albert Einstein
Compounding is the key to making a lot of money. Start tiny, but invest for the long term. Forget short-term investing or getting-rich-quick schemes.
Let me share the story of a janitor who accumulated $8 million on a minimum paycheck.
Ronald Read, a Vermont-based janitor and gas station attendant, died at 92 in June 2014.
Read accumulated $8 million by following two fundamental principles of personal life.
i) Don’t spend more than you earn
ii) Let’s compounding do its magic
I’m sure if Ronald earned $50 in a week, he probably invested $40 of it. –Mark Richards
He donated most of his wealth to the library and hospital. You can read the full story here.
Knowledge
Stay up to date, read more books, and develop a mental model of what you want to achieve in the long run.
There is no shortcut to get rich. I am not talking about Ponzi schemes or getting extremely lucky.
Let’s say you are investing in stocks.
By staying up-to-date, you will be able to make better decisions to invest in great companies.
Living
Living below your means should be your first principle to make more money.
It’s the Golden Rule to get financial independence.
Let me recall the example of Mr. Read, who acquired $8 million overtime by using this principle of spending less than he earns.
Diversification
I must say when you make some money, it’s important to learn the power of diversification.
Did you ever hear?
Don’t put all of your eggs in one basket.
Diversification is the key to managing the risk factor when you start building wealth. Let’s take an example.
Example
- S&P 500 (Allows you to buy into a portfolio of 500 companies)
- Dollar-cost averaging
Investing the same amount of money in a target security at regular intervals over a certain period of time, regardless of price.
Income
The best way I learned to boost my income is by investing in myself.
As said in my previous article (here), don’t worry that you are wasting money on gym membership if it’s improving your health.
I have a $100 monthly budget to buy books or learn from courses to boost my income.
That’s the best way to broaden my perspectives, bringing more ideas.
That’s how I started a side hustle, and I can live on just writing. However, it’s just another source of income.
Generosity
When you start making money, don’t ever say no to the underprivileged.
Trust me; it’s perfect for the good in need. It is also great for your mental health.
Make a conscious effort to find ways to donate a portion of your income to society.
Example
I love to spend time outdoors. Therefore, I love to donate to upgrade the trails in my neighborhood.
I do care about educational charities.
I truly believe we can solve all the problems with education and technology.
Money & happiness
Yes, money will give you happiness.
However, you will learn one day that happiness is your health.
I prefer my health on top of everything, including my family.
I believe that if I am healthy, I can help others, make more money, and truly enjoy life.
Finding the right balance between pursuing money and boosting well-being by spending more time with family/friends is super important.
No one in this world is going to tell you how much money you need.
It’s YOU who is going to decide what your sweet spot is.
The bottom line
In a nutshell, money is never enough.
You can always add another zero.
Find your sweet spot.
Don’t forget to enjoy life while chasing money.
Let me recall the money wisdom.
- Money is a handy tool — not more nor less.
- Compounding is the key to acquiring massive wealth.
- Embrace perpetual learning
- Spend less than you earn — mentality.
- Don’t depend on one income source.
- Give back to society.
Book recommendation: I Will Teach You to Be Rich: No Guilt. No Excuses. Just a 6-Week Program That Works
You can share in the comments what’s working out for you. I am always up to learn more.
