February 16, 2013 in Making Money
How to Start Getting Rich
Now in the first article in this occasional series, I stated that, in my opinion, the first steps to getting rich were as follows.
- Get a job if at all possible – any job if necessary but get regular money coming in;
- Spend less than you earn at all costs, no matter how low your standard of living has to get;
- Save the surplus in an interest-bearing account;
- Keep some savings set aside for emergencies: things go wrong all the time. Most people need to work towards having a few months’ living expenses set aside;
Basically, the idea is to be generating a cash surplus at all times. If you do not have any spare cash, you cannot invest in your future in any way other than, possibly, free education or apprenticeships of some sort (and at current highly inflated prices, with loans that double even those amounts when repayments are taken into account, the value of College education has become questionable, in my opinion).
Getting a JobFor most people, the main way to get money coming in is to have a job – the better paid, the better, usually – except when it is the sort of job that forces you to spend lots of your own money to impress your clients, so that you waste most of what you earn, of course: I’m a bit skeptical of the position many apparently well-paid lawyers find themselves in, from this perspective. It is no use earning a lot if you are constantly overspending. Wealth comes from what you keep, not from what you earn. If your plan is to get out of the rat-race, rather than to have a good career, then it doesn’t matter too much just what the job may be, as long as it pays enough for you to live on, plus any amount on top of that. If you want a good career, well, fine, but be warned that many careers are not all that stable: I chose the IT industry – a mistake, I think, as it changes far too quickly for me to keep up with, with companies coming and going like mayflies at a banquet, and my financial position has always been unstable as a result (and as a result of my not knowing any better how to manage my finances in the past).
My personal view is that any job that you can do, will do. This is easiest to accept, of course, when you are just leaving College or school, and don’t have too many living expenses. You can share digs with friends and keep the extortionate rents down by splitting the costs between you. Many immigrants or itinerant workers do this too: two or three families will rent a flat between them. It may be crowded, but it is very cheap and they can save a fortune in 5 years or so with nothing more than hard work and patience: I know one guy who worked in IT for 5 years then went back to South Africa and bought a whole farm. Another was a builder here for 5 years then went back to Poland and bought his own 11-bedroom hotel. This method can apply anywhere in the world, but it is especially efficient in expensive cities like London, for example.
If you don’t have that opportunity, or you are married and the missus won’t accept it (can you rent out a spare room to a student maybe?), you will just have to save at a slower rate and possibly seek higher-paying work: but without some surplus cash at the end of each month, you are going nowhere.I have written about getting a job quickly elsewhere, but the key to it, it seems to me, is the mind-set with which you enter the job hunt. I have to say that most people, myself included in the past, tend to just look at a few ads, or today we look online, send off a few half-hearted applications, collect some unemployment or other welfare benefits, and fail to get any job for months and months on end. We can prove to the unemployment people that we’re looking for work, but in reality, this isn’t the way to do it – or at best, it’s a long shot. The point is, it is not about looking for a job, or finding a “suitable” job: it is about getting a job, any job, and quickly. The proactive mind-set is vital if you are to stop wasting money, and your life, pretending to look for work. If your long-run goal is financial independence, it really doesn’t matter too much what the job is: it is a vehicle, a stepping-stone towards a brighter future, and nothing more.
The entire purpose of a job from this perspective is just those few pennies you have left over at the end of each month. No surplus equals no future.