Do you realize most people have no idea how to spend money wisely? A few years ago I entered a contest to win a free flatscreen TV. People were asking me why I didn’t just buy a new TV if I was making all this money online. After all, the cost of a new TV wouldn’t put a dent in the income I make online.
So, to answer this question, I want to share with you the best piece of financial advice I ever got. It’s not what you make it’s what you keep. It really doesn’t matter how much money you make what matters is how much you get to keep at the end of the day.
How To Spend Money Wisely – Live Within Your Means
There are lots of people that make a lot of money and spend every single cent they make and more. They drive all the fancy cars go to all the fancy clubs and live a “Millionaires Lifestyle”. Only they’re not millionaires. I like to refer to them as the $30K millionaires. They make $30k a year but live like they make a million.
How to spend money wisely and how to make money are two different things.
Here are some excellent tips by none other than Mr. Warren Buffet. My favorite is On Savings: “Do not save what is left after spending, but spend what is left after saving”. Priceless.
Thanks to low cost leasing and zero down financing anyone with even modest income can project the image of a millionaire. The problem is their debt will eventually catch up to them and that’s when it will all come crashing down. Learning how to spend money wisely is a skill that most people have never been taught.
This is what caused the US financial meltdown. Too many people were spending more than what they make and they were leveraging the debt to the hilt. The funny thing is, that millionaire lifestyle that there trying to project is false.
Most millionaires don’t drive fancy cars or live in upper class gated communities. They’re more likely to live in a middle class neighborhood and drive a domestic sedan. Since the average millionaire lifestyle is modest they get to keep a lot more of what they make. That is the real key to creating wealth.
By investing most of my online income into various investments instead of using it to buy a new TV my investment income is starting to approach my online income. Best of all, investment income is 100% passive. My goal is to have my investment become my biggest income source. To do that requires me to dump huge amounts of cash into it every single month.
Therefore, you’ll see me enter a contest to win a TV before I spend the money to buy one. You can be broke at any level. Just because someone makes a lot of money doesn’t mean he’s rich. There are broke “rich” people. I’m not shocked that 4 out of 6 houses in Orange County were foreclosed on.
Majority of people have no clue “how to spend money wisely”. They will think nothing of purchasing a 60 inch flatscreen TV when their cell phone bill is over a month late. Craziness.
They’re all trying to live a lifestyle that is beyond their means. That gated community they live in only encourages them to keep up with the “Joneses” mentality. They’re not spending their money wisely.
How To Spend Money Wisely Is NOT The Norm
Most people that live in gated communities are not millionaires. Their house is mortgaged to the max and their cars are all leased. They have no real assets and can’t do any real savings because they spend every dollar they make buying depreciating toys to keep up to the couple next door who is trying to keep up with them.
If the economy takes a downturn or something happens to their jobs there toast. And guess what? That’s exactly what happened. After that massive bank bailout the New York Times wrote and article how it was impossible for bankers to live on $500k a year.
That was the amount President Obama set as the top pay for bank executives who’s firms accepted government bailout money. You got to be kidding me. You can’t live on $500,000 per year? Majority of people don’t make that in a lifetime.
REALLY??? WHAT A JOKE!
Some of the costs of being a top level New York banker includes. Private school which cost 32k a year per child. Mortgage 96k per year. The coop maintenance fee another 96k per year. The nanny 45k per year. Taxes 207k. Where already over 500k per year assuming two kids in private school. We haven’t even included the essentials summer home, car and drive, club memberships, personal trainer, personal assistant, the wives clothing allowance, dining out, food etc.
The people obviously do not know how to spend money wisely and living well beyond their means.
Don’t be impressed with someone just because he makes a lot of money. You can be broke at any level. My advice. Don’t try to live the millionaires lifestyle. Oh ya, about that TV. I didn’t win. In fact I can’t remember even checking the results because it’s not a priority in my life seeing I don’t watch TV barely 😉
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Also, if you read Warren Buffets quotes above you would have noticed one of them said “Don’t put all your eggs in one basket”. If your looking for a way to leverage the internet I’d love to show how to earn money monetizing many of the things your already doing. Click below and watch out free video.