“If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.”- Edmund Burke
Over the past couple of years, I have begun to realize that most people’s understanding of wealth is wrong. We often assume that in order to get rich, it is important to make more so we can spend more. A promotion at the office means a raise and a new car or a lucky investment means a wardrobe change.
But if I make $600,000 per year and spend $600,00 per year, am I actually rich? This is where most people fail. You shouldn’t be asking yourself “how can I become rich?”. Instead, you should be asking “how can I make the most and spend the least?”.
The truth is, real financial freedom isn’t the ability to spend. In fact, it is an opportunity to make life choices that lead to happiness backed by a comfortable savings cushion.
Wealth is more than money. It is a series of learned strategies and behaviors.
If you need a mansion and expensive material possessions to be considered rich, chances are my advice will not be what you are looking for. But if you’re looking to establish a foundation for maximum earnings and savings in the future, keep reading. Because what I have learned about affluence in my 24 years of life is that accumulating wealth for the average person is about taking strategic, incremental steps while living below your means.
Redefining What It Means To Be Rich
Making money isn’t that difficult. Plenty of people without college degrees, ambitions, or experience make a comfortable living. It’s what you do with your money that matters.
The key is understanding that there is no straightforward way to guarantee yourself a rich future. However, there are strategies and habits you can implement to improve your chances.
In my mind, the ability to be rich in the modern age comes down to three essential factors:
1. Diversifying revenue streams
Being wealthy is about so much more than your career income. It requires a high-level comprehension of revenue stream diversification and a willingness to adapt and adjust when necessary.
Over the course of two years, I have designed my life to decrease risk while increasing potential earnings. My revenue extends from several core streams including a 9–5 salary, freelance work, writing, and investing. The idea is that if one of these streams fails, then I have some money to fall back on. At the same time, I am also making money from several sources which obviously accelerates my yearly income. Some people wouldn’t consider writing on Medium or doing a few freelance projects as stable sources of revenue, however, I am projected to match my salaried income this month with my side hustles, doubling what I would have made from a single source of revenue.
It is common to settle on your career salary and focus solely on getting incremental or performance-based raises. This is fine, but it severely lowers your ceiling for earnings.
2. Spending less than you make
This sounds simple, but it is a challenge that a lot of us are unable to fully recognize. Recent research has shown that a majority (57% of Americans) don’t even have $1,000 saved due to a misunderstanding of how to effectively save their money.
The day I graduated from DePaul University in 2017, I had two things to my name; student loans and an empty bank account. When I transitioned from a low-paying internship to a full-time salaried job for a tech company, I didn’t upgrade my living situation. When I got a promotion at work and received a substantial raise, I didn’t swap my 2007 Mercury Sable with 125,000 miles for something nicer. By operating with this mindset, I continued accumulating more money while keeping my spending as low as possible. Every month I have been able to put more and more into savings accounts and investment portfolios.
It is important to keep your overhead lean, continue making smart investments, save as much as you can, and budget spending habits to cut unnecessary costs. Most people know how to make money. Not many people know how to save money.
3. Investing in yourself
One of the best pieces of advice I have ever received was to allocate a percentage of my income towards self-improvement. Because the most valuable and unique asset you can offer the world is yourself.
I started spending money on marketing books and biographies that improved my skillset and taught me valuable lessons about growing my self-worth. I took several courses on content marketing and writing and paid for creative resources like a journal.
The real measure of your wealth is how much you’d be worth if you lost all your money.
A common theme among successful authors and entrepreneurs like Tim Ferris and Ryan Holiday or great business leaders like Warren Buffett and Bill Gates is that they never stop reading, learning, and improving. The joy that comes with being rich is not derived from the money itself but the achievement and creative effort that it took to get there.
It wasn’t until I started investing in myself and building a personal brand that my annual income nearly doubled in worth.
At the end of the day, it really comes down to how you define affluence. To me, being rich is having enough money to travel, spend time with friends and family, and work on things I love like writing and fitness without having to worry about money.
In diversifying your revenue streams, living below your means, and putting a percentage of your earnings towards self-improvement, I believe this is attainable. Start with something small like adding one revenue stream or making a low-cost investment. Then grow your wealth from there.