The Case For Getting Rich Slowly
Taking FOMO, YOLO & HODL out of personal finance
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I recently wrote an article on why so many Millennials (my generation) have been so susceptible to highly speculative investments like crypto in hopes of striking it rich.
To summarize:
Their entire adult lives to date have been bookended by painful economic recessions.
Many have been priced out of the traditional paths to building wealth, i.e., college education and homeownership.
Instead of lending an empathetic hand, society ridiculed them and focused on petty issues like avocado toast rather than real issues like housing affordability.
The result: many Millennials looked at “new ways” to create wealth quickly with things like crypto.
Ultimately, overreliance on such speculative assets will only make their financial problems worse. For every Dogecoin millionaire, there are 100 people who piled in at the top and lost their shirts.
Building wealth slowly is an amazing way to learn
Let’s say you just won $10 million in the lottery or with some random crypto coin.
Does suddenly having money make you good with money?
Of course not; ask every actor, athlete, and lottery winner who quickly amassed a fortune and lost it all.
Having money won’t change your life unless you become the kind of person who’s ready to use wealth to perpetually fund your dreams.
Building wealth slowly is the only way to guarantee that it lasts.
Why?
Because everything you had to do and learn along the way to building wealth slowly will turn you into the kind of person who can handle it.
I’ve spent the past decade going from $50,000 in student loan debt to a seven-figure net worth. There was a hell of a lot of bumps along the way.
Family drama
Working multiple jobs and still not making ends meet
Landing a great paying job
Spending the first two years of my career living like a student and paying down debt
Resisting the lure of lifestyle inflation as I advanced in my career
Saving up for a house
Learning (the hard way) that owning a home is a massive commitment of time and money.
Finding a slow, boring investing strategy and not getting distracted by meme-stocks or the hot new investment trends that come and go.
Managing money is simple, but following through is hard.
Doing those hard things every day for a decade changes you into the type of person who is ready to handle wealth.
The simple & slow steps to building wealth
Building wealth is simple. All you need to do is earn more money than you spend, invest the difference and repeat this process for a decade or two.
There are two ways you can increase your savings rate.
Cut your spending.
Increase your income.
Obviously, you want to do both, but the primary focus for anyone wanting to build wealth should be increasing your income.
There’s a dirty secret in personal finance:
The frugal path to wealth is a luxury of the middle and upper classes.
You can be the best budgeter in the world, but if rent is $1,200 and you only make $2,000 per month, your margin of error with your spending is close to zero.
If rent is $1,200 and you make $8,000 per month, then you have a wide margin of error. It allows you to cut back on small indulgences, increase your savings rate and then attribute your success to your “frugal” nature.
But, let’s not kid ourselves; nobody ever got wealthy by cutting out their lattes. They got rich by making enough money to allow themselves to save and invest a healthy amount every month and waiting for compound interest to do its magic.
That’s why the most important investment you can make is in yourself. Invest in your human capital and ability to earn income. The higher your income, the easier it will be to become “frugal” and start saving enough money to (eventually) change your life.
A teaser of next week’s newsletter: My 5-step plan to create FU money slowly but surely
Get a good job with flexibility
Live below your means and start investing
Start a side hustle, maintain your cost of living, and invest even more
Keep building the side hustle until it exceeds your 9–5 income… This is what Financial Freedom looks like
Keep investing until you don’t even need the side hustle… This is what FU money looks like
We will be diving deep into
Trending on Medium
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A question for you…
I am thinking of starting a quarterly Making of a Millionaire magazine. It would be free to paying subscribers to this newsletter.
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PS: Have a money question you want answered? Ask it here, and I’ll answer it in a future newsletter.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.