When I started my career in 2008 my salary was in the mid $30,000s, and all I had for assets were a few thousand dollars in mutual funds. When I moved into my own place the following year I was excited to learn as much as I could about the the real world, and how to manage my own money. The words below helped inspire me to become an investor, and is still one of my favorite financial quotes today.
“Rich people buy luxuries last, while the poor and middle class tend to buy luxuries first. The poor and middle class often buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old money people, the long-term rich, built their asset column first. Then, the income generated from the asset column bought their luxuries. The poor and middle class buy luxuries with their own sweat, blood, and children’s inheritance.”
Robert T. Kiyosaki
This made a lot of sense to me so I incorporated these words into my own life. Instead of buying luxuries, I started to build my “asset column.” Just like building any kind of foundation the process began very slowly. My $3000 of mutual funds was only generating about $150 a year in dividends and interest, but I kept investing every dollar I could save. I only made a few hundred dollars in my first year. But I became a better investor as time went on and as my income from work grew, I was able to save and invest more, and made almost $800 in the second year from my asset column. The third year I saved even more money to invest, and continued to re-invest what I already had, and received more than $2000 in dividends by year’s end. And today, those assets are generating more than $4000 every year. So instead of buying a vacation with my own sweat and blood, I can let “the income generated from my asset column buy” all my luxury needs, (lol, sounds like an oxymoron.) The combination of investing regularly, compound growth, re-investing dividends, and growing my income faster than my spending has given me a positive start to financial freedom. If you haven’t started building your own asset column yet, don’t wait any longer. It doesn’t take much to get started. But it will require a great deal of patience in order to see any significant returns on your investments (especially in the first couple of years.)
Sacrificing a small bit of instant gratification now for stable (and most likely growing) income in the future is worth it to me. Even after a job promotion last year I still make below average salary. But it’s not about how much money we make, because what’s more important is how we make our money work for us (^_^) To do this we must learn to live within our means, keep our money safe, don’t take on too much risk, keep an eye out for opportunities, invest wisely, and perhaps even start a part-time job or side hustle. For most people, it is possible to slowly but surely reach the point where their investments make as much money as their work income, at which point, they don’t have to rely on a career to put food on the table anymore! I understand that this will take decades, and a bit of sacrifice, but for those who want it, it will be well worth it.
* This post was updated on Feb 11th 2012