Yes, I said that. And I will repeat, just because you are earning big money or you have prospects of earning big money doesn’t mean that you will become wealthy. There are lots of sports people that earned millions that are now broke, Kenny Anderson, Vin Baker, etc. Your salary and wealth are not necessarily linearly correlated. There is a simple way to get there but lets not dissuade ourselves from a misconception that when you will finally starting making more money in your business or at your job that’s when you will be on a sure upward trend to your goal.
Remember with big incomes comes the need for expensive private schools for kids, the latest equipment, the latest and more expensive cars and watches, more international holidays and bigger egos. On the outside, these people have charmed lives that we all admire, I mean who doesn’t want the latest of everything, big homes, haute couture fashion and a jet set lifestyle. That’s what all our dreams are made of. I am no exception as I am even planning on getting a pilot’s licence in a few years from now as soon as my income gets to a certain level. The true route to wealth is simple, there are no fancy algorithms or formulas, it is one simple thing;
“SPEND LESS THAN YOU MAKE, INVEST THE REST”
Whatever business you are in, wealth can only be created spending less than you earn. When you spend less than you earn, this leaves you with enough money to invest. Investing means you are using your money to make you more money, spending your money on building yourself a house is unfortunately not an investment, its your home, a dwelling and as long as you stay in that house, it will never make you more money. I am sorry to all those that build themselves big houses thinking that they are investing. An investment property is a property that you buy with the intention of making money from it, either by making it a residential property (you put tenants that wish to live in it and collect money) or commercial property, you will put tenants who wish to rent the space for offices. It is something that I feel as Africans (Zimbabweans, specifically) we need enlightment on, we are busy building dream homes and we comfort ourselves by thinking if I pass on my kids can inherit. But think about it, the only things that will happen if you didn’t leave any other income generating investment for your kids are these;
- Your kids will have somewhere to stay upon your death
- Then soon enough, the transfer costs will force them to sell the house to cover those
- If the transfer costs don’t catch up with them, the maintenance costs for the big house will
- Meaning eventual selling
Use your big incomes wisely, spend less than you earn and invest in income generating projects.
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