How do people get rich? Why do we care so much? Do millionaires really have a better wealth philosophy than the rest of us, or are they just
lucky? Would you rather be rich or happy?
For most of us, it’s an academic question. We have no plans to be the next Mark Zuckerberg, Kylie Jenner, Warren Buffett, or Beyonce. If we’re not committed to making big money, but we’re still dreaming big, then we need to think hard about what’s most important. Then we need to earn, spend, and save accordingly. Easier said, eh?
I wanted to buy a house for myself on a low salary in the pricey Southeast. It took many years of increasing my income, my savings, and learning to say no to anything that wouldn’t help me achieve my big goal.
As a first-time buyer, it’s easy to have dips where you just wish a money tree would fall out of the sky. If you could only win the lottery, or swap bodies with an A-lister, then everything would be solved overnight. Wishing does not make it so.
We have to chip away at our goal instead. Chip away slowly but surely because the alternative is doing nothing and getting nowhere.
The Only Wealth Philosophy You’ll Ever Need?
I’ve laid out my approach below. I don’t know if it’s the only philosophy you’ll ever need because we are not peas in a pod. You might find one point useful to adopt, or none of it, or all of it. Do what’s best for you.
I don’t write this as a millionaire either. I write it as someone who has consistently set big savings goals and hit them. It’s inescapable to notice that not many people find this easy.
I don’t always find it easy either, but it is often second nature. This might be because I was raised with a certain attitude to money. Or it might be down to working out what makes me comfortable. It might be from exposure to good influences online that have taught me to think about the value of money deeply. Why shouldn’t you benefit from what I’ve learned?
I write this as someone who feels they have financial freedom (with a definition that suits me). Also I write it as someone who feels they are rich in other ways that have nothing to do with money. I write it as someone who’d rather be happy than “rich” by a media definition.
My Not-One-Size-Fits-All Philosophy
To refine your wealth philosophy, could you mix and match from this list?
- Have multiple incomes
- Use everything to death
- Don’t automatically replace dead items
- Don’t shop for things you don’t already own
- Don’t try to keep up with the Kardashians
- Borrow and scavenge
- Pick a valuable hobby
- Embrace the original meaning of sacrifice
- Always look for a better deal
- Invest in a way that suits you
- Be sparing with anything inherently disposable
- If you can’t afford it in full without credit, you probably can’t afford it
Let’s break these motherlovers down.
1. Have multiple incomes
Get a second job, even if it’s only now and again. Sell what you can. You probably won’t earn millions, but it will give you more financial freedom.
2. Use everything to death…
…but be nice to everyone. If you’re not willing to throw something old out, then use it ad nauseum until it walks out the door itself.
3. Don’t automatically replace dead items
Try living without them or discovering a substitute. When I do resolve to replace something, I’m still usually in no hurry. I’m not going to waste too much precious energy searching for the right replacement at the right price. This is one way to learn delayed gratification. Play the long game.
I once saw consumer expert Avi Shankar say on an episode of Shop Well for Less that research suggests only 20% of our purchases are rational.
40% of our purchases are emotional, and 40% are habitual. An emotional purchase includes buying things that you don’t yet have plans for.
The five steps to rational purchasing are supposedly: 1) recognition (I need to replace something) 2) researching 3) evaluation 4) buying 5) reflection.
The problem is step one… Are we recognising a true need? Will you really suffer without this item in your life?
4. Don’t shop for things you don’t already own
Marketing will convince you need to own your first coffee machine even if you don’t drink coffee.
What if we can’t resist searching for perfectionism? Feed the urge and modify your environment with ways to save money and time instead. The alternative is convincing ourselves the bed would look nicer with some completely useless cushions.
The beauty of minimalism is that the less you own, the less space you will need in your first home and your forever home.
5. Don’t try to keep up with the Kardshians
Don’t play misery poker, or compare yourself to others.
Want to know what misery poker looks like?
Player #1: My neighbour has a Tesla, but I can only afford an old banger.
Player #2: I can’t even afford a car, so I have to take public transport.
Player #3: I can’t even afford public transport, so I have to cycle everywhere.
Player #4: Cycle? I wish I had a bike. All I’ve got is this old skateboard.
Player #5: I don’t own any of these and walk everywhere. **** you all.
Player #5 wins… But what did they win really?
The genius myth is just a myth. There are very few geniuses on the planet, but there might be people who got a headstart on you. Don’t convince yourself you hate your job and your living situation in the meantime.
Why do we associate a large house full of things/an expensive car with success? These things cost a lot of hours. The people that own them often don’t own them outright. Whether they do or not, they might spend far more time working than you.
Be a competitive saver by all means, but set your own definition of success.
Hedonic adaptation is our tendency to return to a baseline of happiness after each upgrade in life. I recommend Mr Money Mustache as an additional resource to learn more about this. He also has some hacks if you want to stop chasing newer and shinier things.
6. Borrow and scavenge the unloved and unwanted…
…but don’t beg or steal obvs.
7. Pick a valuable hobby.
Fill time with people, not things.
Learn a skill that pays for itself.
8. Embrace the original meaning of sacrifice
I have a tattoo that says sacrifice. If we look at the original meaning of the word, it’s about serving a higher purpose rather than going without so we can feel sorry for ourselves. We don’t need to have the heating on if we’re still only wearing a t-shirt…
9. Always look for a better deal (on your spending)
This only needs to take a few minutes to compare prices, or go via a cashback site.
If we’re not sure if something’s a good deal, then listen to your spidey sense. It’s probably your instinct telling you the purchase can wait.
Conversely, look for a better deal on your possessions, your partner, your job, and your friends with caution.
10. Invest in a way that suits you
If we need to access the money in less than five years, then the stock market might not be the best place for our savings.
If you’re risk averse anyway, do your research, choose an investment that will hold your hand, and start with something small like £25 per month.
I’m not a financial advisor, so again: do your research.
11. Be sparing with anything inherently disposable
I wish chocolate magically regenerated, but unfortunately it can’t be reused.
Use less of the things we rely on daily and we’ll expend less money, time and energy on replacing them constantly.
12. If you can’t afford to pay for it in full without credit, you probably can’t afford it
Apart from my mortgage, if I can’t afford to pay for something in full today without credit, then I can’t afford it full stop.
Credit cards are for building credit scores and earning cashback on things you can afford anyway.
Stay away from debt for the sake of debt.
How To Live Your Wealth Philosophy
Do I follow this strictly every minute of every day? No, I’m not a robot. But for the most part these points reflect my spending habits without me having to think about whether I’m consciously following a philosophy.
Have I always been like this? Nope. I was good at saving on certain things from an early age, but as a teenager I also had an addiction to buying magazines if nothing else.
Then during my first adult job I developed a clothes shopping addiction. This got knocked on the head when I had bought so much stuff that I was starting to feel suffocated. I realised accumulating and accumulating was making me less happy, not more. This coincided with me needing my savings for other major expenses. Many of the points above started to form into habits out of sheer necessity.
You don’t have to be a minimalist
As you can guess, I’m not actually much of a minimalist therefore. I still own probably 90% of what I bought during my shopping addiction. I bought more than I could wear in a year, but that means that years later I’m still shopping from my wardrobe. I’m very good at not adding to my collections, but I had collections in the first place.
I do sometimes find myself relying on something suddenly after two years of not using it or wearing it, and I attribute this to point #3 of the philosophy. It’s not that I invented a new routine that incorporated this existing item. More likely it is substituting for something else that has demised recently.
The deadly opposite to this is buying things we don’t need because “we might need it one day…many years from now.”
Also I’m a bit baffled by people who rack up debt buying clothes etc who are advised to then throw the majority of it away. If you’re not going to sell something, you may as well use it since you went through the trauma of getting into debt.
If I threw away most of my wardrobe I think the urge to buy more would return. Only by being saturated with stuff did I stop buying. I have to have a little claustrophobia to remind me that I don’t want to shop.
Need more help?
For how you can save on specific spending categories while renting read How I Saved Half My Wages For A Deposit While Renting in London.
For choosing a system that will superpower your finances read Epic Ways to Save for a House.
For help closing the gap between your deposit, salary, and chosen property location read What You Need to Get the Best Mortgage Offer.
So, do you have a philosophy? Do you recognise any of the above? What stops you from saving and building wealth? Let me know in the comments.
I can’t teach you the steps to get rich fast. For a lot of people, I suspect this wouldn’t fill whatever hole they’re trying to fill anyway.
I might be able to help you earn a little more, save a little more, spend a little less. If you’re trying to buy your first house, I’ve slogged the same path. If you want to go on a journey, join the mailing list today.