The other day I had lunch with one of my former colleagues from my former dutiful corporate life.
A life I left 8 years ago.
So still meeting her occasionally for lunch after such a long time is quite a big thing for me.
After the normal catch-up talk, she suddenly asked me, “How did you become rich?”
“Two ways. Gradually, and then suddenly.” was my answer.
What did I mean by that?
I guess you who frequents this watering hole would wholeheartedly agree that there is no “get-rich-quick-scheme” that works for anyone else but the one who created it.
It takes time. It always takes time.
And you young people have much more time than I have. Your single greatest asset is time. Be mindful of that.
When I was young, I was lucky. Getting my first paycheck I somehow* started to set up a regular savings plan with a fixed amount being invested into two broader-based unit trusts (ETFs did not exist yet back then).
And then I literally forgot about them because I did not have to make any further decisions. My investing was automated and I was able to avoid the emotional roller coaster of having to decide each month how much and in what to invest.
I continued doing that paired with the occasional one-off investment of bonuses or ‘left-overs’ into diversified unit trusts over the next 25 years.
As I learned later, I was allowing the magic of compounding to work its magic – in a slow, deliberate and sustainable manner.
I stayed invested throughout the dot.com bubble, the Great Financial Crisis and all the other scary – at that moment – corrections.
Not many people get rich being afraid. That’s a fact.
So there we have one but fundamental way to accumulate a nest egg: GRADUALLY
The second way
You don’t get rich at work. You get rich at home. That is why you must do your homework.
And your homework is to determine for yourself what is ENOUGH.
All of us invest because we have goals, and most of those are designed to make us happier. By and large, they will. But I’m often amazed at how much effort we put into chasing things that probably won’t do us any good while discounting and ignoring the stuff that probably will.
One of the simplest ways to grow wealthier is pushing to detach yourself from peer pressure and care less about what people think of how you live.
Without question you have to find your answer to this question:
“How much do I need to lead a life that is meaningful, purposeful, and joyful?”
Once you have answered that question for yourself, documented it and then never change those goalposts in the future, you have set your sights on achieving Financial Freedom.
Once you arrive at that “point of enough” you are SUDDENLY rich!
If, however, you can’t answer that question for yourself, you will never ever achieve Financial Freedom because you do not know what is enough.
Now the challenge is that the human species is falsely called homo sapiens (‘wise man’ or ‘thinking man’). A better term might be homo expetens (‘wanting man’), because what characterizes us most is our capacity to want, to desire, to yearn for and generally lust after.
You know that equation: Wealth = Earn more or spend less.
And spending less does not mean that you have to become stingy.
Just frugal.
Being frugal is different from being stingy.
Given, “frugal” is a very unfashionable word nowadays; nonetheless, it is a trait that had built nations.
It is derived from the Latin “frux”, meaning fruit or virtue; and “frui”, meaning to enjoy or use well. Therefore, frugality does not actually mean going without; instead, it means enjoying what you have!
“Frugal” simply means having a high “joy-to-stuff-ratio”, getting the maximum enjoyment out of our resources.
Now, let me close with an important belief of mine in context with that question by my friend (“How did you become rich?”)
Being rich is never a number. It is a feeling.
And that feeling depends so much more on that “2nd way” than that “1st way”.
Luckily, we are all living in a world of abundance!
Do you feel it?
Rule yourself and TACOMOB.
* till today I still do not know what triggered that “somehow”