I was reading these articles on CNN Money and this particular sentence scream out to me.
The article is called Smartest Advice I ever got and it gives you about 40 advice tips about money. Most advice focus on creating wealth through investments.
Here are my favorite two:
Mellody Hobson
President, Ariel Investments
When I was 22, a friend who is very successful explained to me that no one ever got rich through earned income. "Look at all the great wealthy families," he said. "From Carnegie to Rockefeller, it was never how much they made at work that made them wealthy - it was their investments."
And that made me shift from thinking about a paycheck to thinking about building equity and long-term wealth. And it has helped me a lot. Instead of a raise, I ask for more stock.
Meir Statman
Professor of finance, Leavey School of Business, Santa Clara University
My parents told me, "Use money well, but do not waste it." I remember receiving a bicycle when I was a kid. When I asked my dad how much it cost, he wouldn't tell me. So I grew up with the sense that money is there to do good things, to support your family and others.
I like to think I'm frugal. "The Millionaire Next Door" describes millionaires who never buy a new car because its value goes down substantially after two years and so on. I buy new cars. I check with other dealerships to get the best price. But the idea that I have to live like a pauper even if I have the means to live better doesn't make any sense to me.
Be frugal but not stingy !
Monday, July 28, 2008
No one ever got rich through earned income
Subscribe to:
Post Comments (Atom)
7 cool comments:
I buy new cars. I check with other dealerships to get the best price. But the idea that I have to live like a pauper even if I have the means to live better doesn't make any sense to me.
Totally agree. To me buying a used car is potentially buying somebody else's problem. My very first car was used and in 4 years I had it the repairs cost me the equivalent of payments on an expensive car. I buy smaller cars than I can afford, but new. Besides, some cars hold value pretty well. When I totalled my 3-year old Corolla, I was pretty pleased with the amount of money I got from insurance.
I've never thought of myself as frugal because I thought it is the same as cheap and I do splurge on things I like - within reason. After reading these blogs it seems like it is more about living within one's means, not wasting money and looking for the best deal. So I guess I am. I may be borderline cheap in some things and wasteful in others, but it works in total.
I also don't see the point of living like a pauper just to save. What is the point really? To enjoy money when you have arthritis, heart problems and cannot go far away from the hospital ER?
It's really not all or nothing and depends on one's circumstances.
When I asked my dad how much it cost, he wouldn't tell me.
My parents had no problems with telling me how much things cost or that some toy I wanted is "too expensive". Nothing wrong either way.
Having the means to live better NOW does not guarantee you will have the means to live better later.
As millions of Americans have recently learned, your personal financial position can go south in a hurry.
I say you can never have enough to stop living frugally.
Michelle Singletary just wrote in the Washington Post column that it's a good thing to live in a mental recession - to make decisions as if your income could disappear at any time. I agree with her for the most part. I still do stuff with my money that I enjoy, within reason. Saving like there's no tomorrow has increased my net worth so quickly and efficiently!
Having the means to live better NOW does not guarantee you will have the means to live better later.
I agree with that. The key words here is "within reason". Spend within reason, save within reason. Spending 100% of one's income isn't reasonable; saving every single penny while living like a pauper is not either. But it all depends on individual circumstances. There are times when it makes sense to save every penny.
I say you can never have enough to stop living frugally.
Depends on the definition of "frugally". I'd argue that for someone earning 100K with 7 digit net worth, a new Honda Civic is a frugal choice. For Donald Trump - a Lexus is frugal or even stingy. For someone who is just starting and has no savings and little income, even a 5-year old car may be too expensive.
"Spending 100% of one's income isn't reasonable;
...saving every single penny while living like a pauper is not either"
That's what I hate about the traditional financial advice, ----save and starve and cut out fun
blah, humbug! There's gotta be another way, oh yeah- EARN more money
I doubt if Donald, Oprah and Bill got rich by saving and cutting out expenses and living frugal
They got it by thinking BIG and outside the conventional wisdom box
What if you're spending every penny while living like a pauper?
@ anom
I guess it could go both ways. Doing either one is not wise.
I just think everything has to be balanced
There is only 3 things you can do with money
Give
Spend
Save
Doing a little bit of all 3 can make you more comfortable with money.
Post a Comment