Today I have a slightly different guest post for you by Perry Wilson who runs the blog www.stupidisthenorm.co.uk.  I’ve been reading a lot of Perry’s blogs recently and they are very good.  They make a lot of sense.

It’s all very well us making money and finding ways to earn extra income as busy parents, but what is best to do with that money? 

In my early twenties I’d have blown the lot.  I got a buzz from spending my cash and owning lots of things (mainly clothes), but now in my thirties things are different.  I have a family and responsibilities.  I prefer a more minimalist lifestyle.  I don’t need or want to consume as much.  I’ve started thinking about my future and my retirement.  I’ve started putting away towards a pension as well as a savings account for emergencies or the future.

Perry writes a lot about this.  About how most people just blow all their cash instead of investing it wisely and becoming wealthier.

I hope you enjoy today’s guest post:

An Abnormal Income Stream

Not everyone wants to be wealthy, but I don’t know anyone who couldn’t do with a little bit more money. 

We sell our (and others) junk on eBay, we work overtime, we do matched betting, and car boot sales. But what are we doing with all this extra cash? Are we just spending it on other stuff? What’s the point of selling stuff on eBay or at car boot sales, only to use the money to buy more stuff to sell on eBay and car boot sales?

Why not instead, put the money to work? Because if you ALWAYS spend all your money, you’ll NEVER be wealthy (just saying this in case you actually do want to become wealthy). 

Investing the extra cash you make creates ANOTHER income stream. I’ve just checked my pension fund, and there’s 31% more money in there than I’ve invested. It’s FREE money. I haven’t had to work for it. It’s unearned. 

Wealth isn’t defined by what you earn, it’s defined by what you accumulate. It’s not what’s on your drive, it’s what’s in your bank. 

When you have enough money invested, you just can’t spend the interest/growth fast enough. It just keeps compounding. That’s how the likes of Bill Gates and Warren Buffett keep making more money. It’s not because they’re part of some international conspiracy, it’s just maths. 

Their secret is not that they’re members of the illuminati, it’s because they both started investing from a young age, and growth plus time has done the hard work for them. 

For me it’s too late. I’m 56. There just isn’t enough time left to me to take advantage of the compound growth required to threaten Mr Gates or Buffett’s positions as amongst the world’s wealthiest. 

It IS still possible for me to become modestly wealthy however. I can, with some effort, accrue £300,000 in 10 years. It’s not a fortune, but it’s sufficient to buy me a 50’ Bénéteau yacht moored in Gibraltar marina, and funds enough to sail the Mediterranean in my dotage. It’ll do me. 

And all this because I decided to save and not spend for 10 years. I worked instead of wasting. I created another income stream. 

There’s a price to pay to become wealthy, and I’m prepared to pay it. Not everyone is. For some it’s a price too high to pay. But if you want to become wealthy by any degree, the journey begins when you spend less than you earn. 

 

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