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TIE #003: Stop Saving Money, It's Making You Poor
Being frugal isn't bad, you're just playing the wrong game when you do it.
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Open any finance book or watch an investment related YouTube video and you’ll hear the same rhetoric on repeat:
“Save 10% of every dollar you make and invest it into an index fund. After 50 years, you will retire rich!”
A quick Twitter search shows how often this type of advice is spread throughout society:
You’ll even find people that take it a step further and make you feel guilty about those little $5 purchases by showing you the future value of that $5:
“That $5 cup of coffee could be $225 in 46 years if you invested it instead!”
While this isn’t wrong, it hinges on several non-guaranteed assumptions:
That whatever you’re investing in will always “go up”
That you never lose your job
That inflation doesn’t eat away at the value of your nest egg
It’s also insufferable as hell… You know what’s easier than giving up that $5 coffee (that you look forward to every day) for life?
Making an extra $10/day so you can buy the coffee and still save the $5.
In theory, you probably would end up rich if you lived like a robot and never bought anything unnecessary while investing the money instead.
Not only is that unrealistic, but if you execute this plan to perfection and nothing goes wrong, it’s still going to take you a couple decades.
If I haven’t made it clear enough, let me say it again:
While all of this advice sounds nice, the optimal end scenario is still some version of living poor during your youth so you can hopefully end up rich once you’re old.
No matter which way you slice it, you’re trading away valuable time with no guarantee of success.
Let’s take a look at the real world numbers.
If saving your life away to end up rich at 65 years old was such a foolproof plan, surely most retired people are rich right?
According to the Federal Reserve, the median net worth for 65 to 74 year old’s is $266,400.
Unfortunately, you can’t retire with that amount of money without help from the government.
Hope, patience, and deprivation are not a great financial plan, despite everyone in the world telling you it is.
I’m not some financial expert but here is the formula I used to become financially free in roughly five years:
Income earned that doesn’t require you to actively trade your time for it
Waiting to invest in capital markets until you have more money than you know what to do with
Never using high interest debt
Unnecessary expenses kept to a minimum (but not so much that you’re miserable)
The key to the list above is the first bullet point, making money independent of an active time investment.
Doing so allows you to make money while you sleep and earn more than any company would ever be willing to pay you in your lifetime.
Best way to do that? By selling a product or service.
You can wish that this wasn’t the case and complain or you can accept it as reality and do something about it.
I can’t make that decision for you.
If it wasn’t obvious already, this is why you see me talking about selling stuff on Amazon all the time.
It is one of the best opportunities for beginners to learn skills that can be leveraged in the future to make an income you’ve always dreamed of.
My journey went something like this (yours can too):
Tiny online side hustle + 9-5 job ($500 net worth)
Larger online side hustle + 9-5 job ($5,000 net worth)
Multiple online side hustles ($50,000 net worth)
Built side hustles into real businesses ($250,000 net worth)
Sold one of the businesses ($500,000+ net worth)
Started investing outside of my businesses (financially free)
Does that sound like I accomplished all of that by focusing all my effort on saving money?
Instead, I just made sure not to buy anything stupid (expensive) and focused on earning income that didn’t require me to clock in.
The hardest part of breaking free is getting started and the best time to start was yesterday.
Once again, the choice is yours.
When you are ready, there are two different ways I can help you:
If you are interested in starting an efficient one-person online business, I recommend starting with one of the following:
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