In my glorious “return to blogging” article, I mentioned that I had experienced some things during my hiatus that changed my outlook not just on money, but life as I know it.
The first and biggest “financial awakening” in my life came after reading Rich Dad Poor Dad. It truly opened my eyes to what I really wanted for my life and I highly recommend it to everyone I come in contact with.
I have had a few subsequent revelations since then. They usually happen during a completely random moment, which makes the time of their happening hard to pinpoint.
All I can remember is waking up one day and thinking, “since when did I believe that?”
The Game Changer
I began to wonder why that was, and the answer could not be more clear now.
Anyone in the world can be frugal, but that isn’t what makes rich people rich, and you don’t want to be like everybody else. Frugality is easy and that is why it has limited potential when it comes to building wealth.
When compared to increasing your income by 20%, saving 20% of what you already make is as easy as fluffing a Spongebob pillow.
Think about it, if something tragic were to happen and you needed to cut your spending by 20% in order to keep your home, car, apartment, pet frog…whatever, you could do it. To cut spending, you go over the things you are intimately familiar with. You don’t have to do any creative thinking.
What if you couldn’t cut your spending? You would instead have to increase your income to make up for the difference in living expenses. This is where the magic happens. It causes you to think outside the box, and if you want your life to be different, you have to think differently than the average person.
Exterminating Your Expenses
Let’s say you are in trouble and need an extra $250 a month to avoid getting thrown out on your butt. You decide to cancel cable TV temporarily, quit eating out as much, and cut down on your visits to the local drinking hole.
Three months later your troubles have passed, so you decide you want all your favorite channels back, you eat a fancy dinner, and then you celebrate with a trip to the local pub.
You are back right where you started.
The moral if the story is simple.
Reactive financial decisions lead to stagnation and regression.
Expanding Your Earnings
You are in trouble again, you bad, bad boy (or girl), and need an extra $300 a month so the mafia doesn’t come to your door and revoke your “protection”. You decide to start doing some freelance design work to make up the difference.
The month goes well and you actually make $500 so you decide to continue designing business cards, fliers, and brochures.
Three months later, you’re additional expenses are gone, only this time, you have $500 of monthly income that you didn’t have before.
Instead of being back where you were three months earlier, you are now much better off.
The moral of this story is equally plain, but much more important. Proactive financial decisions lead to improvement and progression.
It’s almost too easy:
- Reactive = Regression (Saving what you already have)
- Proactive = Progression (Earning what you don’t already have)
I have never heard of someone wondering, “How can I live the rest of my life making the same amount of money but saving more and more of it until I have enough so that when I’m old and wrinkly I can visit the San Diego Zoo without worrying about the cost?”
The question people do ask is, “How can I get more money?”
The only logical way to get more money is to earn more money.
Learn How I Made $10,000 But Saved $20,000
I didn’t, I’m lying.
You can’t save more than what you make, which is why frugality and cutting spending is limited.
Don’t get me wrong, I’m not saying that frugality is worthless and your practice of saving money is futile.
Frugality to some degree is necessary to build wealth, but it plays only a small part in the bigger picture.
Learn How I Made $10,000 And Then Made $100,000 More
The potential to earn more money is nearly unlimited. Theoretically you could earn all the money that exists on earth, and maybe even obtain some alien currency.
That is why earning money is a much more likely candidate to succeed in the race to become wealthy than stashing money away.
Which situation would you rather be in, earning more and more money every month, or finding ways to cut your spending every month?
Saving alone can get you where you want to go, it will just take longer. I don’t know about you, but I want to experience freedom with my time and money as soon as possible.
Forcing Yourself To Act
My mind is constantly thinking (without my permission usually). It used to be of ways to save money and cut spending. In the past few months though, it has been all about ways to make more money, and guess what started happening, I started making more money!
The more time you spend thinking of ways to earn more, the more you will actually earn, but remember, don’t spend all of your time thinking, spend it doing as well.
Different Sources Of Income
The best sources of income are passive, meaning that they make you money while you sleep, but whether you are earning active, passive, or semi-passive income, you are on the right track to eliminating debt, traveling the world, or fulfilling whatever goals you have set for yourself.
Have you ever had a financial or life changing revelation? Did you do anything about it? Share your experiences with others in the comments below.