I heard a recent podcast about the lifestyles that result in people being very fat or very thin. People have studied the behaviors of people who have tendencies to be over or underweight. And they find that these body masses don’t result from a few isolated decisions about diet. Instead, they result from hundreds of subtle behaviors, most of them unconscious. For instance, thin people showed a great propensity to sit with their backs to buffets in large restaurants. There was a notable difference in the way the two types arranged their kitchen cabinets, even when the contents was just the same, so as to promote different ease of access to food. Again, most of these behaviors were not conscious. But when applied throughout several decades, they resulted in some people being on one extreme or the other.
This isn’t meant to be a comment about weight. I want to make the point that these things happen for good reasons. And the same can be said of being rich or poor. These end-points are the result of tens of thousands of money decisions made many times a day. As with unhealthy body weights (over and underweight), sorry financial states often result when little care is given to financial decisions. But as with fitness, financial health is the result of intention and focus. Every financial decision, and some that are not directly financial on their surface, can be thought of as an investment. Here are the kinds of micro-investments that you and I make every day, which will eventually result in wealth if consistently applied.
- Saving over Debt. Saving is the investment in future security. Rather than losing ground that must be gained back later, it is a setting aside of instant gratification for a future reward. If you’re in debt, you’ll have to save for a long time before you “have” anything. But this is part of the process. Debt snowballs really easily. So if you’re determined to grow rich, you’ve got to kill your debt first. There are dozens of decisions you make every day, from what you eat to how you entertain yourself to where you drive to what you buy online, which determine how much money you can save. Your employment and side work also has a lot of bearing on how much you can save.
- Frequent Investments. These are proper investments. People who invest early and often are likely to grow wealthy if these investments are well-chosen. Buying a first home while you are young, getting good at Forex trading, and making regular monthly IRA/401(k) contributions are important ways that the average person accumulates wealth over time.
- Frugal Lifestyle. I touched on this a little bit in 1), but it deserves its own heading. People who have strong friendships tend not to need to spend as much on consumer goods. People who feel fulfilled tend not to need the most expensive housing. There are a thousand ways that these sorts of behaviors play out, but if you look closely at your own life and the lives of your friends, you’ll start to notice them.
Growing wealthy takes time, but it’s the result of thousands of little decisions, not just the BIG financial moments we sometimes think about as investors.
Image Credit: Biblioteca Centrală a BM “