The Formula for Prosperity and Wealth
Let me start out by saying that I am one who believes that we were not intended to work (slave away) at a job that we don’t like until we reach 65. I think “early retirement” is a better objective.
What I am about to tell you is not at all difficult and something you know intuitively. But you’ve been brainwashed to an extent by the banks, credit card companies and main stream media. It’s important to get your head on straight about this simple concept or you will never see any sort of early retirement, much less improved standard of living.
Let’s start out with an example that we all can relate to.
When we work at our current job or business, there are 2 outcomes with how we treat our earnings. Either we consume, or we save. If we consume all the results of our work, no wealth is generated. It is as if we have relegated ourselves to a treadmill mentality with no financial progress. Sometimes this “happens” due to uncontrollable circumstances however, most people consume to and above (go into debt) their income level without evaluating the consequences.
However, if you put away some money, the savings are invested, either directly or indirectly by using something like a savings account. In other words, as long as you don’t hide your savings in your mattress, the money is being put to work to earn interest someplace else. This is the general formula you have to get working in your favor however, most have the tables turned.
The goal of savings and investment is to have more money (value) in the future than you have today, so that you are able to consume more in the future than you can in the present with less effort. This is called the concept of of wealth creation. When you follow the simple formula of save and invest over long periods, you grow wealthy.
So here is the “bottom line” Saving is the pre-requisite to wealth creation. There is no way to short cut or clip this economic reality. And this formula cannot work in reverse, meaning that you borrow your way into wealth. That was the lesson of this economic crash and one you have to learn and one even the government will learn yet again.
One of my favorite sayings is that life is about lessons; you either adapt of get left behind.
Related posts:
