Financial Trade-off's Determine Whether or Not You'll be Rich

Here's a piece from the Motley Fool where the author lament that she'll never be rich because she's not willing to make the proper financial decisions and be disciplined about her money. Cry me a river. Yet she does make a valid point -- what you spend today will cost you tomorrow, a fact you need to consider when you spend money. Here are the details:

Let's say I have $5,000 in disposable income that I can spend on landscaping and/or a bathroom remodeling. The payoff is immediate (or near-term) enjoyment that will last a long time. But I could delay that gratification by investing the money instead, and that would also offer me a compelling end result.

So if I ended up with $85,000 in 2030 because I decided against some landscaping and white bathroom tiles in 2005, I could expect to withdraw around $3,400 per year, or $280 per month.

Yep. This isn't rocket science, folks. (That's why I am qualified to write about it.) ;-)

Growing your net worth is pretty simple actually. It just requires one thing that most people don't have when it comes to money: discipline.

The article goes on to review some habits of people "with net worths considerably more than average." She was surprised at the findings, but if you've been reading this blog for any amount of time, you won't be.

Finally, the author gets it:

These little episodes often have me muttering to myself something like, "How cheap can you be?" Me, I'd just buy another VCR/DVD player, and I'll grab a new sheet of paper towel when I need one. But when I stop and think about it, these are the kinds of mindsets and actions that help people get rich -- without extreme pain and suffering. As we've been told many times, there are ordinary people all around us who are much richer than we'd think -- because they live below their means, clip coupons, shop carefully, and invest prudently.

Again, the keys to financial success are pretty simple. Follow them and you can't help but grow your net worth.

Comments

[trip]

The Fool has gone downhill the past couple of years. I steer clear from the products they peddle these days.

[Hazzard]

I have learned to look at money, not as a means to buy more things, but more as a tool to help me do the things I want in life.

It just so happens that I want to give my future self many more choices than most people. In order to do that, I need to invest in my future self by saving.
Hazzard

[Bill]

I'm way too young to think back to the "godd 'ol days" when the Fool was AOL-only and was a small, personable community. They jumped the shark a couple years ago when they went to subscriptions. Great way to kill people linking to your site.

[nanotube]

I agree with the discipline part, you need it to save whatever amount you want. You need to control yourself in order to live better in the future and I totally agree with it. But, isn't it a bit off when you use and dry your paper towel and reuse it?

[Gio]

You're basing your calculations on a yearly net return of about 13%, isn't that too much of a stretch? Would you be able to meet such goal consistently?

[FMF]

For me, yes, it's a bit over the top. But probably some things I do are a bit over the top for these people too. ;-)

[FMF]

Gio -- I'm basing my calculations? Do you mean MF is basing their calculations?

[Gio]

Yes, sorry, I didn't realize it was a quote. So if MF knows how to get 13% consistently I'd really like to know their strategy ^_^