“Wealth is a state of mind,” the popular saying goes.
Some would say it’s the lack of money that makes people poor. Others would claim it’s the spiritual emptiness of the rich that makes them miserable. I can’t speak for others.
Here’s what I learned alongside building my financial independence.
Income doesn’t equal wealth
My parents are cash-rich but not wealthy.
They don’t have properties, stocks, or any inheritable assets. So, I’m probably not getting much. But that’s fine. I grew up with another problem.
My cash-rich family fosters a “poor” mentality.
All the money in the world couldn’t make us rich. Even if we had $10 million in cash, we’d still scrape pennies to close the month.
My dad still earns well over 6-figures and sometimes even extends his hard work to an extra zero on his tax statement. However, that million has never helped us feel like we had a comfortable life.
Emergencies, rampant spending, and gazillion compounded details made us all sleep in a rented 2 bedroom flat. I grew up in a weird limbo.
Our wealth didn’t grow in proportion to the money my parents had.
Many athletes face a similar, but more extreme reality
Football, Baseball, and NBA stars splurge while the money flows.
Life seems like a never-ending party. Lambos and Las Vegas hotels. Back-to-back villa parties. Each check comes bigger than the last. But once the music stops, they’re out of wealth. Nobody is around to keep the needle on the vinyl.
Some athletes come from low-income households.
Sport becomes the only way out of ghettos. They dribble their way out of street shootouts and food stamps. Some become rich. Lucky ones turn famous.
And almost all of them keep the mentality.
The hamster wheel of rags-to-riches and back to rags is more common than staying wealthy.
I wanted to break the spell.
Wealth is not the abundance of money
If you earn $80k a year and live happily, spending $50k, you’re rich.
Imagine if you invest the leftover $30k into properties, stock portfolios, and growth assets. Then, in 10 years, you could finally become more independent.
In 20 years, you’d build a considerable portfolio. In 50 years, your heritage would be sizeable enough for your children to continue accumulating wealth.
Three generations down the line, you’re eternally rich. Just ask your British friends about their posh friends working menial jobs. For many, having a job is just a pastime.
Wealthy teach their kids how to stay wealthy, no matter the job they work.
Abigail Disney was “taught from a young age to protect her dynastic wealth.”
If you make $1,000,000 and spend all of it in the same year, you’re left with nothing. On the other hand, if you grow your 1,000,000, you can go bankrupt many times and still stay rich.
I turned to markets and financial education
Sisyphus cheated death but ended up pushing a rock uphill for all of eternity.
This was probably not his plan, but it’s something that happens. Social patterns are near-impossible to break. I wanted to cheat the destiny of my class.
Rich mostly stay rich while the poor manage to get food on the table, have a few weekend drinks, and splurge on a nice piece of tech now and then.
I ran away from myself.
My parents couldn’t teach me about financial independence. They never taught me to think long-term.
I picked up financial books. I’ve got some skin in the game with my first stock portfolio in 2011. I’m nowhere near being a wealthy individual, but my journey feels exciting.
I’m not missing on any fun. I don’t save rigorously. I’m just learning to manage my money. I wouldn’t buy a Hermès bag, but I’ll buy a financial asset any day.
If I go off the grid tomorrow, I could live for a year without any income.
So my best financial advice is:
Think in decades.
Time + Money = Wealth
Grow your bond bank. Buy revenue-generating assets. Compound. Repeat.
Financial independence will make you happier than any spurging spree.
“Nothing looks as good as financial independence feels.”
This article is written 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.
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