Well, as I’ve had a quarter-century of experience as first a spendthrift and now a tightwad, I have to say that they both have their charms.
But the surest road from spendthrift with debts piled high to tightwad with no debt and a big bank balance is: no new cars. Buy used, and hold onto it for dear life until you have to get it junked. Rinse. Repeat.
The biggest obstacle to financial independence is the car.
For the past 10 years I’ve followed the above course, and I can now afford any luxury I feel like. So I get to be both a spendthrift and a tightwad, both at the same time. Most of all, I get to enjoy life.
If you can manage it, BTW, take public transportation. The cost of driving a car every day to work is enormous in comparison, assuming you have a commute of any distance at all.
I have a second cousin who started out dirt poor and died with about $25 million. A lot of it was luck – moving to California at the right time and going into the right businesses as they came along.
But one thing I learned from him was not to just throw money around. For example, he would buy a really good pair of shoes and then, when the time came, he would get them resoled.
He also gave to charity. If nothing else, I think it gave him a sense of balance.
One word of caution. You have to learn how to make yourself happy with or without money. After the basics are covered, you have to ask yourself what you are really after when you buy something big. If you don’t know, then it will be just a temporary fix.
It’s also razor sharp. Desiring it can slip the edge deep, almost unaware. Plenty of folks croggle at the gush of dark arterial blood, oblivious to the subtle initial sting. How and when did that happen?
Money is value neutral. It just produces the result it’s applied toward. Money isn’t an end; it’s a means. The tricky part is figuring out the difference.
What is living rich to you?
Special possessions? Freedom from outside demands? Ability to travel, or experience certain things? Resources to support things dear to you?
Likely it’s a combination of the above.
Know what you actually want.
FWIW, most of the happiest rich people I know haven’t gone for the obvious routes. They’ve balanced ends with means. Quiet money, enjoying the making as much as the result.
My advice?
Honor the work you’re given. Honest work is a gift. Fools blow off chances to learn from hard circumstances. (Money can be inherited; grit and savvy can’t.) Buy quality, but use use it up, make do, make it yourself or do without.
Figure out what living wealthy-ish actually means to you first.
Know what you actually want
Live below your means and save has been pretty well covered…
Choose who you have in your life wisely. Its hard to become wealthy if your friends spend every last dime, want to take expensive vacations together, and blow their post college income on drinking four nights a week and fast cars. Its hard to become wealthy if your spouse or spousal substitute is a spender. Its hard to become wealthy if you are always bailing out family because “you are the one with money.”
(Of course, choosing a spouse who already has a lot of money rather than one that has a lot of debt doesn’t hurt. Neither does chosing distant elderly relatives who are going to leave you money when they die).
(If you aren’t going to start your own business (which we aren’t inclined to do) - all is not lost. Getting a pretty well paying job with stock options, grants, ESPPs, 401k and bonuses and stashing as much away as you can has been pretty good to us. I’d consider us “wealthy-ish.”)
Ahhh… a wealth accumulation thread…excellect.
First of all congrats on your thinking and good luck. Not very many people your age think about things like saving and investing.
Try to build a grubstake by not spending on anything you don’t need. Before you buy anything, from a pack of gum to a house, ask yourself these questions…
Can I get it cheaper elswhere ?
Can I make it or build it for less ?
Can I trade something for it ?
What happens if I don’t get it ?
Can I borrow it ?
Can I buy it used ?
Can I sell it after I’m done with it for the same or more money ?
Can I do something for someone and they’ll give me what I need ?
The idea is to avoid buying anything until you can save up a few thousand and start investing it. It’s called a “material fast”. Most people I know that are wealthy don’t show it in any way. I’m not talking about people that got Daddy’s money but folks with regular jobs that have been frugal their whole lives. The “Millionaire Next Door” is an excellent book for someone in your situation. Get it at the library !
I don’t remember where I heard it but one of my favorite quotes is:
“Use it up, wear it out, make it do or do without”
Flip apartments. Buy apartment in Manhattan, resell in a year.