Amassing massive wealth is on many people’s agendas. The craze of becoming rich is understandable, and possibly natural; money solves an incredible number of problems. Millions of books, articles, and papers, focused on the “secret sauce” to becoming rich have been written, and many of them offer legitimate, viable methods. After reading similar material, you’ll soon realize that there are many ways of acquiring wealth, but frugality isn’t one of them. Frugality is the quality of being frugal, sparing, thrifty, prudent or economical in the consumption of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance.
The benefits of a frugal lifestyle
Spending money as sparingly as possible at all times, is the key attribute to living frugally. Frugal people will pick the option that costs the least in most cases, and are conscious of their spending. The frugal lifestyle has numerous benefits, that don’t necessarily include making you rich. Thinking like a frugal person however, may help you avoid unnecessary and unplanned spending. Whilst living a frugal lifestyle may not lead to riches, it does help you save money you could direct elsewhere. It’s similar to a stepping stone, especially when your income is very low, and there isn’t much left after paying for basic commodities like shelter and food. Frugality is a way of life that can help you shift the odds in your favour slowly, and when applied consistently, when you earn very little.
Over time, being frugal allows you the discipline to save what’s left for future use. In the case where you have accumulated personal debt, a frugal lifestyle can help you spend as little as possible and save as much as you can to pay back those debts. It is easy to focus the same discipline required to live frugally towards saving; a necessary evil to avoid living paycheck to paycheck before you finally strike it rich. In the case where your income is low and very little is left after basic expenses, living a frugal lifestyle will let you direct your money towards increasing your income. It’s an easy way to minimize expenses and take control of your expenditure.
Basic principles of personal finance
As helpful as being frugal is, it’s not enough to make you rich. You may hear people scolding you for buying lunch everyday instead of carrying packed lunch, as if saving that money will instantly make you a millionaire. Whilst there’s something to be said about spending less money, there’s more to accumulating wealth than simply saving your lunch money; it’s not enough. Being frugal is intrinsically linked to saving money, and yet saving money alone won’t make you rich either. To build wealth, an understanding of basic principles of personal finance is absolutely essential.
Firstly, it is important to learn how to make money, and keep it. This is where frugality could assist you, or merely saving money. The goal is to have surplus after basic expenses have been taken care of. In order to achieve this, it is crucial to live beneath your means. There’s a big difference between living within your means, and living beneath your means. With the former, you earn $1500, for example and spend $1500; but with the latter it indicates spending $700 of that $1500, leaving $300 surplus. The difference doesn’t have to be so large, you see the picture?
In addition, it is important that you spend consciously. Forsaking all fine things in life can often feel like a punishment, which is where purposeful spending comes in. Being fully aware of where your money is going and which luxuries you’re allowing yourself to spend on will ensure you remain on top of your finances. The surplus money should then be used for investing. Lastly, multiplying your sources of income is an integral part of wealth building. It is incredibly hard to become rich when you’re depending on a single source of income.
What will make you rich
If being frugal won’t make you rich, then what will? There are countless ways to build massive wealth, some legal and others incredibly unscrupulous; but the focus here is on legal and perfectly achievable ways to get rich. The 2 most popular methods are popular for a reason, and have been tried and proven millions of times. The 2 methods are interlinked as many things in life are.
Investing early and often
Stocks, bonds, mutual funds, money markets, unit trusts to name just a few are viable options to acquiring wealth. Educating yourself appropriately and sufficiently means you avoid too many novice mistakes. Alternatively, you can hire an experienced financial expert to assist you in making your investments. Saving is not enough, it is vital to invest some of that money saved. Investing is a long game that requires time, patience and consistency…it eventually pays off.
Starting your own business is not easy, but it is one of the most surefire ways to become rich should your business grow and continuously turn a profit. There are numerous kinds of businesses you could start that could earn your money. The internet has made it much easier to start a business with little to no capital involved, and a multitude of online businesses are thriving. Perhaps to relieve pressure, you could start it as a side-hustle and then dedicate yourself to it full time.
On a final note, a frugal lifestyle, though not for everyone, can be helpful in multiple ways; it however won’t make you rich. Wealth acquisition requires more than simply cutting back on expenses and saving as much as you can, though it can be an important step depending on your situation. To become filthy rich, perhaps the first step is to consider investing and starting your own business, and believing you can become rich.
A note from StartupBiz Zimbabwe: Everyday we send business updates via Whatsapp. Send the word “Subscribe” via Whatsapp to +263778798072 (StartupBiz Zimbabwe) to receive free business ideas and business tips in your Whatsapp Inbox everyday.