How to be Rich
Ever wondered how you can be rich, no matter how much income you make?
Here is the secret:
Live below your means. Spend less than you make. It’s that simple.
Personal debt including loans, lines of credit, and credit card balances are the kiss of death for wealth accumulation. While you may not be able to avoid going into debt to buy a home, otherwise it’s best to avoid debt like the plague. Want something? A new TV, a hot tub, a nicer car? Save up for it.
The Wealthy Barber, David Chilton, wisely suggests that when you’re in the wealth accumulation phase of your life (i.e. pre-retirement), you should save 10% of every paycheque you receive. Invest it and never touch it, until you retire. Put it in a globally diversified portfolio (more on that on our How to Invest page).
You can start this at any age, it’s never too late. But if you start this habit in your early working years and keep up with it consistently, say in your late teens or early twenties, you will undoubtedly be way ahead of the game (and your friends and colleagues) when it comes time to retire and move into the wealth decumulation phase.
At that point you can give yourself a nice pat on the back, pour yourself a glass of champagne, and celebrate your financial freedom (or what Jon Chevreau would call Findependence).
Pretty easy isn’t it? Not really? Trust me, it is easy, once you get used to putting that 10% away. You’ll never miss it if you’re determined to not ever touch it.