There's a Small Difference Between Financial Success and Financial Disaster

I had a ton of comments on my post titled Spending Less Versus Earning More: Which is More Important to Financial Success? and I hope to highlight several thoughts from readers sometime in the future. But for now, I want to share one with you that really hit home for me and summarized many of my feelings:

It's really this simple.

If every day, you spend a nickel less than you earn and invest that nickel, you will eventually become wealthy.

If every day, you spend a nickel more than you earn, you will eventually end up in jail and die penniless.

The raw amounts of income and expenditures are irrelevant. It is the combination of underconsumption and investment of the difference in income-producing assets that generates wealth.

Very well said!

I've talked about this issue over and over again and it's one of my primary focuses here at Free Money Finance: if you want to become financially secure, you need to spend less than you make -- no matter how much you make. It's the first step in becoming rich and one that can make anyone (at any income level) wealthy.

Comments

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Living below your means is not only smart allows you to have money to invest with, but it also shows self-control. JLP just mentioned this- and it is true- self control is the most important factor in making and keeping wealth.