Yes, I know…I’ll bore you again about financials and financial education. However it is just so important – equally important as getting a college education. I mean you can learn about liberal arts and history and what not, but if you can’t understand money and how to deal with it, you are really setting yourself up for failure in your financial life. I mean think about it: almost anything you do in this life is surrounded by money. You don’t feel good and you need to see a doctor? You need to cough up some cash. You want that new line of clothing that Calvin Klein released, you guessed it: you’ll need to run your credit card like crazy.
Many times we have heard our parents and people that used to be our influencers when we were younger say: you need to learn how to save money. And although that is true because you can’t spend faster than you earn, it is also very false. It is very old school if you like. So prior to 1971, this piece of advice would take you real far. I mean it would probably be a good idea. I still don’t agree on trying to scrub pennies together to make ends meet (when you can go out and make more.) But let’s just say for the sake of the argument that it was a good idea prior to 1971. What is 1971? The year of course President Nixon took the US off the gold standard. Because of that, the USD gets inflated and loses value as years go on. So in other words, the Federal Bank is printing money like crazy and isn’t following the gold standard. Why on earth, would you want to save money, when it is being printed like that? I mean if you save let’s say $50,000 (which is very very low for savings but anyway) up to when you become 80 years old, that will probably be worth around $30,000 (depending on how early you started saving.) I mean it is foolish. No one can save their way to wealth. If you are planning to have a good enough retirement to enjoy your grand kids and have something to offer your family, saving is not the way.
Now of course, many people will take this statement and stretch it like never before: I am not saying go out every night at Sushi bars. What I am saying though, is that if you are saving for more than a decade (and most importantly aren’t planning on spending it somewhere) you are being foolish. You will be better off to put it in ETF stocks or stocks that pay good dividends. The low interest your bank will give you, won’t even last you to drive your car to the bank and see that what’s the current balance in your bank. So you need to be wise about financials.
It is funny, because Americans are considered today to have the greatest education ever in US history. But even so, people are becoming more and more foolish about their money decisions. Reckless spending is one thing, but saving your way to wealth (which you will never achieve that way) is simply moronic. It’s also depressing. To want to save as much as possible and not buy that extra pair of shoes you so much want for the sake of saving, is only going to make your life miserable.
What’s the solution? Work more! I don’t know why in 2017, the word “work” is tied into something evil and a form of slavery. A man (meaning human, not just the gender – you feminist attacking people,) only is valuable and worth something through the work and value he offers. In other words, we are all pieces of nothing. But the work we do and our work ethics are something that give us a little bit more value and recognition to our existence. In other words: if you ain’t working why are you living? You are just wasting your life.
Now again, based on the above statement people will stretch it and make a big deal out of it: I am not saying work more hours necessarily (although if you are only working 8 hours/day, you need to work more hours) or don’t take vacations (although if you are taking weekends, you definitely don’t need a vacation.) What I am saying, is make your money work for you. If your net worth is growing only because you are working more hours, that isn’t necessarily a good thing. I mean strong work ethics, sure! But smart work ethics too. You need to learn to invest your money (that you can very well save.) And I don’t mean playing black jack on the stock market but investing maybe in mutual funds etc. In 2017, believe me there are so many financial firms will be happy to take your money and invest it somewhere. You just need to be smart about it and don’t give it to losers.
If there is anything you should keep from this blog today, that is: you can not save your way to wealth, simply because that wealth you have been saving will get diluted and lose value. You are better off working harder to make more but also putting your money to work for you – not the other way around. Having said that, reckless spending is even worse and I can guarantee you that you won’t make it to retirement as a happy, comfortable living type person. A happy medium is probably what you should look at. But then again: you should not be looking to be mediocre. There is a big difference!
Hopefully this blog has rung a little bell in your head and woke you from the deep deep sleep/lie of saving.
Take care and I look forward to your questions.