It’s amazing how many young people (and lots of older people) equate making mucho dinero with being rich. But you need more than a big income.
A good example: the cable show Entourage . In Entourage , the main character is a fictionalized version of Mark Walberg after he became famous as a Hollywood actor. Mark’s character and his friends spend all their time and money buying toys and chasing girls, while their accountant sits in his office and screams at them. The entourage is hell bent on spending every cent of the multimillion-dollar income their buddy is earning. And that makes them feel rich.
The truth is, they are just as broke as they were when they were living in Brooklyn . The only difference is that they are spending more. To be rich, you need lots of money in the bank. A big income can give you a great lifestyle, but if you are spending it as fast as you are making it (like the entourage), when you stop working or a financial emergency arises, you’ll very quickly find out how un-rich you really are.
If you want to become wealthy – in terms of having lots of money put away for a rainy day … or money to spend after you stop working for it – you are going to have to learn how to save and invest a significant portion of your income. But here’s the good news for those of you who are just starting on a career. The best time for you to start saving money is now. If you get yourself into the habit of doing so, you’ll be rich before you know it.
(Ed. Note: This is an excerpt from Michael Masterson’s new book Automatic Wealth for Grads… and Anyone Else Just Starting Out. For Michael’s step-by-step advice on building wealth through saving and investing … get the book!)[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]