Unless you’re already a billionaire or possess Aladdin’s lamp, saving money is crucial to your existence in this world. I want you to be able to buy your dream house by bringing traditional wisdom under modern scrutiny and I’ll show you how to do just that. In this article, I’ll explain how you can save more money by investing it instead of saving orthodoxically.
Before we get started with the financial lingo and money talk, let’s make sure we’re all on the same page.
Shattering Traditional Views
Many times in our daily life we come across sayings and beliefs that are part of our culture or community and, while apparently not so gigantic upon first glance, the consequences of these beliefs have a defining role in how we perceive the world around us.
Some of these sayings and beliefs are not just limited to a community or country — they are spread throughout the globe and we’ve come to accept them as universal truths.
I believe nothing should be taken at face value — no matter how enticing or logical it may sound at first. For beauty is merely in the eye of the beholder and logical derivation is only as good as the medium used for derivation. It’s not apparently logical that a sub-atomic particle can be in two places at once, but that is how it is.
There is something much closer to home (or rather the eye) than sub-atomic particles — money. Money might not make the world go round but it sure makes the planet’s inhabitants circle the globe in search for it.
Here is something we all know: saving money is good. Right? After all, money is vital to everyday survival and thus it naturally becomes a resource that should be saved just like any other valuable resource.
How to Save Money
By now we’re all on the same page. Money is important and saving some of it is essential. The question remains: How do we optimally save our money?
Should we put it in a bank? Perhaps invest in a locker? Maybe we should just hide it under the mattress to get to it faster in case of emergencies? Or perchance it’s in our better interests to not spend a single cent over what is absolutely necessary for survival? Absolutely NOT!
I’ll let you in on a little secret: You must understand how money works in order for you to make money work for you the way you want. Instead of saving heaps full of money month after month and hope it’ll become intelligent on its own; you need to learn how to control it without letting it control you. Now I’m not going to give a lecture on how economics and the monetary systems work (we’ll save that for another post) but I will demonstrate my point with a very simple example.
Saving Up for the Dream House
Suppose you earn $4,500 every month which amounts to a pretty good income of $54,000 per year. It’s a decent annual salary by every standard regardless of where you live on the globe. Now, imagine that in order to get by you only need $4,000 per year which essentially means that you’re saving $50,000 every year.
If you decide to buy your dream house, say, a beachfront mansion that costs a million dollars, it would take you 20 years to save enough to buy that house. Realistically speaking, we’ll also have to account for inflation over the two-decade long time period, (the mathematics for which we’ll go into in another post). Considering all of these factors, what are the chances that your million dollar dream house will still cost a million dollars by the time you have accumulated all that wealth? Close to none, really.
Take a minute to think about how many success stories you’ve read of people who became wealthy, significantly improved their lifestyle, or got out of a crisis by living frugally and saving every penny that came their way. I bet they dwarf in comparison (to say the least) against stories of people who took risks and made investments to be where they are now.
Invest Your Money
Saving money is overrated and too mainstream; take your pick of words. Instead of saving your money, invest it wisely (and I don’t mean in a locker). In fact, the only reason you should have of saving money is to invest it in the foreseeable future.
The reasons behind investing your money are endless and I could go on for days telling you all about them. But the true benefit if investing is that it will bring monetary return in one form or another given that a wise investment is made.
Wrapping It Up
There is no requirement for making investments. You can start out with a few cents or pool in centuries of gathered wealth. There are potentially unlimited investment options around us every day but the right mindset must be adopted in order to set forth in that direction.
I encourage you to adopt the investment mindset today to bring about a positive change in your lifestyle and take the first, albeit small, step towards a prosperous future.
What is your take on putting money aside for smart investments as opposed to incessantly saving it? Are there any questions you’d like to have answered in future posts? We’d love to hear from you so let us know in the comments section below!