Save money. Period.
Let me convince you to save money. It won’t take long. But it’s an odd task, isn’t it? Do people need to be convinced to save money?
My observation is that, yes, many do. Past a certain level of income people fall into three groups:
- Those who save,
- Those who don’t think they can save, and
- Those who don’t think they need to save.
This is for the latter two.
The first idea — simple, but easy to overlook — is that building wealth has little to do with your income or investment returns, and lots to do with your savings rate.
In the 1970s the world looked like it was running out of oil. The calculation wasn’t hard: The global economy used a lot of oil, the global economy was growing, and the amount of oil we could drill couldn’t keep up. We didn’t run out of oil, thank goodness. But that wasn’t just because we found more oil, or even got better at taking it out of the ground. The biggest reason we overcame the oil crisis is because we started building cars, factories, and homes that are more energy efficient than they used to be.
Investment returns can make you rich. But whether an investing strategy will work, and how long it will work for, and whether…
