Have you ever wondered what the surest way to achieve wealth and financial independence is? If you only retain one piece of information from this website – hell, from any personal finance content you ever read – let it be this: spend less than you earn. That’s the most fundamental requirement to building wealth and reaching financial freedom; without following this principle nothing else really matters.
Basic financial advice regularly goes something like pay down debt -> build an emergency fund -> invest for longer-term goals. What do all these things have in common? They require you to regularly spend less than you earn. What you do with the money you don’t spend is secondary; it is a matter of optimization. So where should you start?
The path of least resistance is usually to cut back on spending. Your spending habits are entirely in your control and can be changed today. Remember that every dollar you don’t spend today is a dollar that you won’t need to earn (or worse, repay) in the future.
If you are worried that your life will be miserable once you start cutting on spending, believe me: you will adapt quickly. Humans have a truly amazing ability to adapt to changing conditions. Just as easily as we can succumb to lifestyle creep, we can adapt to a more frugal lifestyle. What’s more, a frugal lifestyle is actually much more stimulating and rewarding once you start down that path. It provides something we humans need: a sense that we are in control. It isn’t rare for people to think that cutting back will be extremely difficult, only to find themselves continuously looking for ways to cut back further once they get the ball rolling. I think it comes from that feeling of empowerment, of being in control.
For an easy tip to help you spend less, check out this post!
The second option is obviously to earn more; however, there may be some barriers to achieving this in the short-term. For some it might be fairly easy to pick up extra shifts, but for most this will require finding a new job or upgrading skills.
In the long run, you should be striving to both spend less and earn more than you currently do. This is a sure way to send your saving rate skyrocketing and dramatically reduce the number of years it will take you to reach financial freedom.
Get Started – Wealth Is Around The Corner!
It doesn’t matter what your starting point is, whether you are in debt or already have savings, the only thing that matters is that you start spending less than you earn now. That is undoubtedly the surest way to achieve wealth, and if you stick with it everything else will fall into place. If you really think about it, there is a tremendous amount of peace in that, in knowing that you can just go about your life and that everything will work itself out. In knowing that tomorrow you will have a little bit more wealth (or a little bit less debt) than you do today. In knowing that at some point in the future, a version of you will exist that has achieved financial freedom.
Have you recently gone from spending more to spending less than you earn? Are you planning to make that change in the near future? I’d love to hear about your experience in the comments below.