Saving Money Is For Poor People
In one corner, you have the “savers.”
They write about saving $154 by having coffee at home instead of Starbucks. They budget like their life depends on it (kind of does, doesn’t it?) They always spend less than they earn.
In the other corner, you have Tim Denning and Dan Koe.
Tim says saving won’t make you rich. Financial education will. Dan says buying things that cost a bit more than what you can afford is the way to stretch yourself and achieve higher goals.
Let’s get ready to rumble.
When I was younger, I thought saving money was for poor people.
In my head, saving money was something to be ashamed of. Surely, rich people didn’t need to worry about savings, right? They just always have enough for everything they want.
The idea of saving never seemed attractive, so I didn’t.
Then, I grew up, and I started saving.
As I started learning more about money, a specific idea stuck in my head and slowly changed me.
It was this: building wealth isn’t about what you make but what you keep.
If you make $500K per year and waste it all, and I make $50K per year but put $10K aside, I’m wealthier than you are.
Makes sense, doesn’t it? So, I started saving.
Then I was told I shouldn’t save (but for another reason).
Just when I was getting used to saving money, I stumbled upon another idea: investing.
You shouldn’t just save your money because inflation eats them up. Instead, you should buy assets that increase in value and at least compensate for inflation (hopefully, they earn you more).
There was only one problem.
If you’ve invested all your money and you need some emergency cash, you need to sell your investments, sometimes at a loss.
It’s called “low liquidity”. You have money “on paper”. Really, you don’t.