Working On Me

I recently blogged about the eigth ways of getting rich. The last two of those ways are a little different from the others. They are magnifiers.

When you invest money you have earned you make it work for you. Quite independent of your efforts to earn money, it beavers away making you more. It is as though suddenly you have acquired staff.

And when you control how much of your money you spend and channel additional money instead into investment, there's a further boost to your efforts, another staff member stepping up and making you richer.

There is often a belief that being careful about spending is a bad thing; we think of the miser, Scrooge, and the unpopular colleague who never buys a drink when it's his turn. But these are extreme cases and controlling spending and being fundamentally ungenerous are two very differenet things.

Spending is identified by the experts as the top factor in determining your lasting wealth. It seems that you annual income does little to influence your long term wealth, but how you spend your income, whatever its size, is a good predictor of wealth.

I have a relative who illustrates this perfectly. She arrrived in the UK in the mid 1960s with her new husband. Between them, they owned £5. Although well-educated by the standards of the country of their birth, they could only find menial work in the UK, never earning as much as the equivalent of minimum wage. My relative, now widowed and a pensioner, owns property and other investments worth well over a million.