Most People, They Spend More Than Invest

Category: Finance, Personal Finance.

Are there certain rules and habits that lead to wealth? Wealth creation is a combination of rules and habits.

The answer is a definite yes. Here s the number one rule, if you want to be wealthy, its not how much money you earn, its not how many cars you drive, it is how much you can save and invest and that s the key. My dad s an extremely frugal person. Here s a personal example I learned from my dad on saving. Although he is really wealthy he is someone when he goes to a supermarket to but an item such as toothpaste, he will search the entire store for every toothpaste available. I used to think that this was crazy but he taught me those lessons. He will calculate the grams to know which toothpaste gave him the most amount of toothpaste for that dollar he spent.

So because of that, I learned the first habit which is to pay myself first. Now, when people hear that, they say that the reason I can save so much is because I earn so much money. In fact, I would say, even today that I save about 50% of what I earned. To which I retort. And that s been my habit so far. If you can t save 50% when you are earning a thousand dollars, you can t save 50% when you are earning a million dollars. In fact, ever since I was really young, even when I made some money selling stationery, I would never spend it and I would just save that 50% allowing me to compound my wealth.

Spending is when you spend 1 dollar, you get back 0 dollars. Here s the second habit I learnt, people who fall within the poor and middle class category tend to spend more than invest. There s no return when you buy a TV set, or hand phone, CD player, that s spending money. Investment is when you put in a dollar. Rich people think twice, three or even four times before they spend but they never think twice when they invest. You get back a dollar 20 cents. Here s another of my personal examples, when I go to the shops and I see a hand phone costing 500 bucks, I would look at it and say my god, its 500 bucks.

And to me the best investment in the world are in your own intellectual assets. I would think about it for 2 months before I buy it. What is 500 bucks? My friends would be saying, "But Adam, you make so much money. Why are you so stingy? " But I can t bear to spend that 500 bucks because it would be gone. The reason is, by spending that 500 dollars on the books, and applying what, reading these books I ve learnt, I am going to make 50 times or 500 times more. But on the other hand, when I go to the bookshop, I think nothing of spending the same 500 dollars on books.

The last habit is what I call delayed gratification. You must learn to delay and to invest. To be wealthy, you must learn delayed gratification. But most people want instant luxuries now and they spend. Most people, they spend more than invest. So you must have that investment mindset compared to the spending mindset.

So these are the rules and habits that I ve learnt and applied leading me to the wealth I have created today.

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