Can you get rich by saving?

Dec 16, 2008 | | Posted in Finances Savings

Maybe or maybe not. It depends on how much you save and more importantly how much you are able to save. The fact of the matter is it is your mindset more than anything else to get rich. Well! maybe not rich but at least you will have a worry-free life from debt.

Theory of relativity
In the final analysis at the end of the day, it all comes down to Albert Einstein’s theory of relativity. Saving and spending are related – no kidding – and they are inversely proportional to each other.

That means if one goes up, the other must come down. Some may say they are mutually exclusive. They hate each other. In other words, they are like soon-to-be divorced husband and wife. They cannot live with each other any more.

Saving vs Spending
Money coming in vs money going out. That’s the question. If you spend less than you make during a certain period, for instance a week – that’s when most people get their paychecks, you would, obviously, come out ahead. For that week, you will have some extra money left, even if it is a buck.

Weekly paycheck
When you receive your paycheck, you don’t just keep looking at it. Most probably, you would take it to your bank and deposit it. Never ever, I repeat, never ever go to one of those places where you can get advance cash against your paycheck.

Now, you start spending during that week.

Money coming in minus money going out

• If the answer is plus, you spent less than you made for the week. You will be richer now than the previous week. Remember, richer is a relative term.

• If the answer is minus, you spent more than you made for the week. You will be poorer now than the previous week. Remember, poorer is a relative term.

Can you get rich if the answer is plus?
Well! Maybe not rich, but definitely richer than the previous week. That’s for sure. Now if your plus numbers, or more explicitly dollars, gets bigger and bigger every week, you might not become filthy rich but you are definitely a lot richer than before.

More importantly, think of it this way. You did not need to borrow money. You are DEBT-FREE for those weeks. That should be a relief and a comfort in your family’s life.

Your mindset
I keep talking about mindset. You have to have a certain mindset to spend less. The below two statements seem to mean the same thing. However, if you think about it, they represent somewhat of a different mindset.

• You make more than you spend,
• You spend less than you make.

The first statement has obvious limitations to it. In many cases, you have no control over “making more money.” In general, it is not your mindset to make more money.

The second statement, actually, belongs to your mindset. You can have control over your spending.

Let’s talk personal finances, shall we?

Let’s talk debt, shall we?

As always, if you want to be on a path of financial success:

• To invest, find a good financial adviser.
• To be debt-free, find a good credit counselor.

What do you think?

Information contained herein is general in nature, and is provided for informational and educational purposes only. Past performance is no guarantee of future results. Talk to your financial adviser.

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Shafi enjoys writing articles on a variety of subjects, paying off debt - at present he is debt free - giving to charities, likes dark coffee, and helping people succeed in their finances and careers. Please Contact Shafi to write for this blog. He also owns How to create your first website.