One of the greatest financial challenges people deal with is the simple concept that everyone can be well off, if not rich, by following simple, fundamental principles of money management. Most people actually believe the opposite: that the rich get richer, the poor get poorer, and there are only a few, lucky individuals who start life poor and end up financially sound.
I'll agree that the cases of people starting poor and ending rich are not that numerous, but it's not because some are lucky and most are not. No, it's because some are disciplined and most are not. For all but the most poor in the most desperate conditions, financial well being can be had in a lifetime as long as the person learns and applies solid financial principles. Unfortunately, these principles require perseverance, commitment, and the willingness to spend less than a person earns. For most people, this is simply asking too much.
I've already posted on the research which showed that the key to financial freedom is spending less than you earn over a long period of time. This is the way that people who've never earned more than $30,000 a year can retire rich (by following the principle) and how people earning $1 million a year can die broke (by not following it). That's really good news for all of us because cutting expenses/living below your means is much easier and more controllable than trying to increase your income.
However, once you generate excess cash by living below your means, you need to invest that surplus wisely to maximize its growth. That's where this piece from the Motley Fool comes in -- it shares the Fool's thoughts on how to go from poverty to prosperity by investing wisely. A few of their thoughts:
The fact is, you don't need a trust fund as large as Paris Hilton's to start securing your financial future, and you don't need an accountant's grasp of financial jargon to profit from the stock market. All you need is the willingness to begin and learn. A commitment to regular, small investments -- I'm talking as little as $50 or $100 a month, folks -- can be the start of a million-dollar retirement account.
Without question, the earlier you start, the easier it will be and the more money you'll actually accumulate. But if you're like me and put off investing until later in life, you still have the ability to achieve your goals. The idea is to start, but start now.
The article goes on to tell about the power of compounding and how you can use it to multiply your savings over and over again to turn your little savings into a massive portfolio.
So the path to prosperity is quite simple:
1. Spend less than you earn.
2. Invest your surplus to make your money grow.
3. Repeat steps 1 and 2 for many, many years.
Yes, it's that simple.
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Tuesday, 6 November 2007
Poverty to Prosperity
One of the greatest financial challenges people deal with is the simple concept that everyone can be well off, if not rich, by following simple, fundamental principles of money management. Most people actually believe the opposite: that the rich get richer, the poor get poorer, and there are only a few, lucky individuals who start life poor and end up financially sound.
I'll agree that the cases of people starting poor and ending rich are not that numerous, but it's not because some are lucky and most are not. No, it's because some are disciplined and most are not. For all but the most poor in the most desperate conditions, financial well being can be had in a lifetime as long as the person learns and applies solid financial principles. Unfortunately, these principles require perseverance, commitment, and the willingness to spend less than a person earns. For most people, this is simply asking too much.
I've already posted on the research which showed that the key to financial freedom is spending less than you earn over a long period of time. This is the way that people who've never earned more than $30,000 a year can retire rich (by following the principle) and how people earning $1 million a year can die broke (by not following it). That's really good news for all of us because cutting expenses/living below your means is much easier and more controllable than trying to increase your income.
However, once you generate excess cash by living below your means, you need to invest that surplus wisely to maximize its growth. That's where this piece from the Motley Fool comes in -- it shares the Fool's thoughts on how to go from poverty to prosperity by investing wisely. A few of their thoughts:
The fact is, you don't need a trust fund as large as Paris Hilton's to start securing your financial future, and you don't need an accountant's grasp of financial jargon to profit from the stock market. All you need is the willingness to begin and learn. A commitment to regular, small investments -- I'm talking as little as $50 or $100 a month, folks -- can be the start of a million-dollar retirement account.
Without question, the earlier you start, the easier it will be and the more money you'll actually accumulate. But if you're like me and put off investing until later in life, you still have the ability to achieve your goals. The idea is to start, but start now.
The article goes on to tell about the power of compounding and how you can use it to multiply your savings over and over again to turn your little savings into a massive portfolio.
So the path to prosperity is quite simple:
1. Spend less than you earn.
2. Invest your surplus to make your money grow.
3. Repeat steps 1 and 2 for many, many years.
Yes, it's that simple.
I'll agree that the cases of people starting poor and ending rich are not that numerous, but it's not because some are lucky and most are not. No, it's because some are disciplined and most are not. For all but the most poor in the most desperate conditions, financial well being can be had in a lifetime as long as the person learns and applies solid financial principles. Unfortunately, these principles require perseverance, commitment, and the willingness to spend less than a person earns. For most people, this is simply asking too much.
I've already posted on the research which showed that the key to financial freedom is spending less than you earn over a long period of time. This is the way that people who've never earned more than $30,000 a year can retire rich (by following the principle) and how people earning $1 million a year can die broke (by not following it). That's really good news for all of us because cutting expenses/living below your means is much easier and more controllable than trying to increase your income.
However, once you generate excess cash by living below your means, you need to invest that surplus wisely to maximize its growth. That's where this piece from the Motley Fool comes in -- it shares the Fool's thoughts on how to go from poverty to prosperity by investing wisely. A few of their thoughts:
The fact is, you don't need a trust fund as large as Paris Hilton's to start securing your financial future, and you don't need an accountant's grasp of financial jargon to profit from the stock market. All you need is the willingness to begin and learn. A commitment to regular, small investments -- I'm talking as little as $50 or $100 a month, folks -- can be the start of a million-dollar retirement account.
Without question, the earlier you start, the easier it will be and the more money you'll actually accumulate. But if you're like me and put off investing until later in life, you still have the ability to achieve your goals. The idea is to start, but start now.
The article goes on to tell about the power of compounding and how you can use it to multiply your savings over and over again to turn your little savings into a massive portfolio.
So the path to prosperity is quite simple:
1. Spend less than you earn.
2. Invest your surplus to make your money grow.
3. Repeat steps 1 and 2 for many, many years.
Yes, it's that simple.
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