Money is often a subject that no one talks about, yet it’s on everyone’s mind almost non-stop. Depending on your situation, you could either be asking questions such as, “I wonder if this check is going to bounce? I hope I have enough money in the account to cover it!” or, “My 401(k) is fully funded this year, I wonder what else I can do with my extra savings?” I’m just guessing that you’d like to be asking the second question rather than the first! In order to do so, you’ll need to understand the two pillars of money.
The First Pillar – Earn Money
In order for you to acquire wealth throughout your life, you must first have a satisfactory income. If you only earn $15,000 per year and have no other sources of income, money will always be tight, and you’ll most likely not have anything left to invest in the future. On the other hand, if you have a way to earn $100,000 per year, I bet you could find a way to become wealthy and retire without much worry.
The Second Pillar – Save Money
While the first pillar is important, wealth cannot be produced without the second, saving money. As I stated before, if you make $100,000 per year, you have a much greater chance of retiring wealthy. However, if you do not develop the habit of saving, you’ll still have $0 at the end of every year, and have very little to show for your efforts.
The True Path to Wealth
Based on the two pillars described above, there is one sure-fire method to becoming wealthy: (1) Increase your earnings, and (2) Decrease Your Expenses. Let’s say you currently earn $40,000 per year and have expenses of $36,000 per year. If you increase your earnings to $50,000 per year, you’ll have increased your potential savings by $10,000! If instead, you were able to decrease your expenses down to $30,000, you would have increased your potential savings by $6,000! But, what if you could do both?
So many people increase their lifestyle with an increased income, which essentially gets them nowhere financially! Think about it. There are doctors in this world that live in large houses with nice cars, but with their mountain of debt, their net worth is not any more than the teacher on the other end of town!
Learn to increase you income AND decrease your expenses and you will be on your way to acquiring and unbelievable amount of wealth.