To accomplish great things, we must not only act, but also dream; not only plan, but also believe. — Anatole France
I grew up with almost no money. I always used to think how some people have a lot of money and some nothing at all. Why does a person need billions when you can happily live with merely 0.005% of a billion?
I started to learn: books, articles, magazines, personal finance gurus, Reddit discussions, quora answers, you name it.
Trust me; I lost a lot of money while on the quest to learn the importance of money and why I need money.
However, the journey has been amazing. In this article, I’ll share what I learned, and I also believe learning is a continuous journey.
You can share in the comments what’s working out for you. I am always up to learn more.
However, along the way, I picked up lessons that completely changed my perspectives on money, especially personal finance.
If you want to live happily and debt free your whole life. you just need my grandma’s rule about personal finances.
Dont, spend more than you earn! That’s it.
I keep adding more ways to earn. One source of income is not enough.
A handy tool but not the Ultimate prize
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
Embed 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 was a huge 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.
Now I use the money to find extra time.
Sure, it can provide comfort, security, and the chance to chase our dreams, but it’s not the be-all and end-all.
Money alone cannot give you long-lasting happiness and peace of mind. Focus on forging strong relationships.
The magic trick you need to master
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 regularly.
Let me share a story of a janitor who amassed $8 million on a minimum paycheck.
Ronald Read, a Vermont-based janitor and gas station attendant, died at 92 in June 2014.
Read amassed $8 million by following two fundamental principles of personal life.
i) Smart spending (don’t spend more than you earn)
ii) Develop investing habits early in your life (Let’s compounding do its magic)
I’m sure if he (Ronald Read) 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.
Get your financial knowledge game on-spot
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 (financially strong) companies.
Live below your means
This 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 concept (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.
For example
- S&P 500 (Allow you to buy into a portfolio of 500 companies in the USA)
- Dollar-cost averaging
- Know when to buy or sell
Always keep an eye on boosting your 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 actually have a $100 per month budget to buy books or learn courses to boost my income. That’s the best way to broaden my perspectives, bringing more ideas.
That’s how I started a writing side hustle, and I can literally live on just writing. However, it’s just another source of my income.
Being generous
When you start making money, don’t ever say no to the underprivileged.
Trust me; it’s really good for the people 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.
For 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. Therefore, I donate. I truly believe we can solve all the problems with education and technology.
Money & happiness
Yes, money will give you happiness. I also learned that true happiness is your health.
I prefer my health on top of everything, including my family.
I believe that if I am healthy can help others, make more money, and truly enjoy life.
Finding the right balance between chasing money and nurturing well-being by spending more time with family/friends is super important.
No one in this world is going to answer you how much money you need. It’s YOU who is going to decide what is your sweet spot.
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 but not the ultimate prize.
- Compounding is the key to acquiring massive wealth (Dont think compounding means only money, learning will bring more ideas on how to compound)
- Continuous learning
- Spend less than you earn
- Don’t depend on one income source.
- Give back to society.
