You won’t get financially wealthy without adopting some of the traits of the wealthy One Percenters.
Here are a few of their habits I have observed that I work on adopting.
#1 Let others pay for your right to be in public spaces.
This is a subtle and ridiculous trait that exemplifies just how deep this prosperity mindset runs in the One Percent.
I meet my buddy for coffee. He owns 3 properties and is 28. He’s doing well for himself.
We arrive at the same time but he gets us a table while I get in line. The result: I spend $2 for coffee and he spends $0. We spend a good 2 hours in conversation.
His cost: his time. My cost: my time + $2.
Normally you can’t walk into a cool coffee shop and sit down and hang out for 2 hours without buying anything. But if your friend gets coffee it’s permitted.
Let others bear the brunt of paying the 800% markup money on frivolous coffee. You can buy good green beans at $6 a lb, roast/grind them at home, and get a great tasting cup of joe for $0.25.
It’s not that you have to give up the little luxuries in life. It’s just that you have to stop spending 800% markup on them.
Never pay full price.
Rich people buy everything second or third hand. Yes, they often look like sh!t wearing second-hand clothes, but think about it: what is more important, looking like you have a million bucks or actually having a million bucks? Which would you choose?
There are always ways to spend less money on something. Retail is for suckers.
If you put in a little more effort you can look very handsome in second-hand clothes (or cars, or anything).
If you really want a nice car, buy it used for 50% off invoice. (Just try negotiating a 50% discount for a brand new car in a dealership.)
Don’t have access to your money.
This is for those low on self-discipline (like me). If you take money out with you you will spend it. If you have none, you won’t even be tempted.
For people who spend all their money in online shopping you’ll have to modify; like removing your credit card information from all your favorite sites so it becomes impossible to “one-click” shop. (Then you could always put your credit card in the freezer in a glass of water.)
Bonus: no theft risk.
If you must have some spending cash “for emergencies” take a single Benjamin out with you.
Every time you make more . . . spend less
Here is a master key to wealth.
The typical way to do this is when you get a raise or your business starts bringing in more cash you spend more of it. The One Percenter way to do this is when you make more you spend less.
You get hired back at your old job at twice the pay; move in with a roommate to further reduce expenses. You get a windfall check; put it away in savings immediately without a second thought (or even better, in an investment account.) You get a raise; find some other expense you can reduce in your life (like stop paying a 2,000% markup for coffee.)
Guys like Ramit Sethi say “Don’t spend less, make more” while most conformist financial advice for 50 years has been “Spend less than you earn.” It stands to reason that combining both these pieces of advice will lead to savings & wealth over and above what otherwise could be.
Build a nest egg and then invest it in a rent-seeking investment property; that’s how the One Percent have done it. Or buy a capital asset with low depreciation and good cashflow possibilities.
Tech startups are for straight gamblers; invest in small business that solve a real problem and are not sexy. The sexier / trendier the business the greater your exposure.
If you adopt the rule When Make More = Spend Less your income and spending will be continually moving in opposite directions and you can keep this up until you absolutely psychologically cannot do it for another day: then splurge a little to release the pressure. Only splurge just enough that you feel relief, then tighten back down.
Follow this advice for 10 years and your net worth WILL skyrocket above 99% of your peers.