We live in a society that takes pride in hard work. We look up to the person who rolls up their sleeves and puts in the long hours. While handling stress well and putting in long hours may correlate with success in our careers, stress and long hours are not a prerequisite to building wealth.
The average American works longer hours than their counterpart in other developed countries.
While I was in public accounting, I could probably count the number of weekends I didn’t work on one hand.
It was expected, that if we want to succeed, we need to put in the long hours.
As a result, we find ourselves with less time for family, less time for relationships, and less time for ourselves. As our time becomes scarce, we often skip over opportunities that can lead to long term success. We opt for the short term fix to help us NOW, instead of planning for the future.
One of my many takeaways from The Millionaire Next Door, was from a chapter discussing how people who become wealthy approach their finances. The key phrase here is ‘who become wealthy’, not to be mixed up with people who were already wealthy.
“People who become wealthy allocate their time, energy and money in ways consistent with enhancing their net worth.”
If we spend two to three thousand hours per year to earn money, then it makes sense to spend a few hours to learn what to do with our money. The problem many run into is finding the time to develop this skill set.
The book builds on this point that while people who are building wealth spend their time on developing their financial situation, people who are not building wealth spend their time worrying about money.
This acknowledges a simple fact that we all share the same 24 hours in a day. No one has a special privilege on more time.
The analogy of a runner is used in the book. When we see someone who is physically fit and out for a run, we might think, “She doesn’t need to be running. She’s already fit!”.
It is not uncommon to see someone’s public victories without having noticed the numerous private victories they had to earn along the way.
Having seen the same discussions pop up time and again from having witnessed people struggle or succeed with their finances, I’m now convinced:
We’re either spending our time and energy on developing our finances or we’re spending our time and energy worrying about money.
Either way, the time and energy is spent.
When we find ourselves drifting into negative thoughts and becoming concerned with money, we ask ourselves, “What can we do right now to improve our financial situation?” Have we taken the initial steps toward investing? Have we utilized all our saving opportunities by squeezing out even those 1% changes that will have a significant impact down the road?
One of the goals of this blog — and a personal journey I have had — is to distill all this information down to the most fundamental truths.
Developing our new money habits can be a slow and tedious process, but it doesn’t have to be. When I began to realize how much student loans my girlfriend had, the bigger realization was understanding how she simply blocked it out of her mind. I think that is how too many people handle it.
Even though she tried to avoid thinking about her loans, her financial situation still caused an enormous amount of stress.
To her, student loans were an insurmountable mountain of debt. In her mind she would spend the rest of her life paying off her loans and so spending another $100 here and there didn’t matter in the long run. Six figure debt was an infinite void with no way out. She took a tremendous step towards financial recovery when she learned that her debt, with 100% certainty, will be paid off. Her actions immediately shifted away from worrying and she began to take actions to improve her finances.
Unravelling our financial situation leads to clarity. Only once we start to peel away the layers, can we identify where to begin.
What are some of the key takeaways you took when you started to shift away from worrying about money and started to develop practical steps towards managing your money and building wealth?
As always, leave a comment below and share your thoughts!