The road to wealth creation, which leads to financial independence if persisted with, is no secret. In fact P. T. Barnum in his 1880 publication,
The Art of Money Getting
(available for free in Kindle Edition at the link), which is still as relevant today as when it was first published, reveals it by the second paragraph. “Those who really desire to attain an independence, have only to set their minds upon it, and adopt the proper means, as they do in regard to any other object which they wish to accomplish, and the thing is easily done. But however easy it may be found to make money, I have no doubt many of my hearers will agree it is the most difficult thing in the world to keep it. The road to wealth is, as Dr Franklin truly says, “as plain as the road to the mill.” It consists simply in expending less than we earn; that seems to be a very simply problem. Mr Micawber, one of those happy creations of the genial Dickens, puts the case in a strong light when he says that to have an annual income of twenty pounds per annum, and spend twenty ponds and sixpence, is to be the most miserable of men; whereas to have an income of only twenty pounds, and spend but nineteen pounds and sixpence is to be the happiest of mortals.”
If “those who really desire to attain an independence, have only to set their minds upon it” and spend less than we earn I ask how do we find ourselves in a world some 133 years later where
every 5 minutes and 7 seconds someone is declared insolvent or bankrupt and the average household debt in the UK (excluding mortgages) is £6,020? Why is it “the most difficult thing in the world to keep it”? While we shouldn't trivialise this as there likely many reasons depending on who you are, which includes some people who through no fault of their own fall on hard times, I also can’t help think of two major reasons which likely prevent the road to wealth from being found for many. The first is that in the modern day a lot of people refuse to take responsibility for their own actions but instead prefer to
act like a victim. The second is education.
If nobody shows you where that needle in the haystack is then probability says you won’t find it. The problem is in modern society who has it in their interest to show you where the needle is? Of course the individual does but if they never know they are looking for it then it’s down to luck to stumble across it. Family and friends possibly do but it relies on them having found the needle for themselves. Worse it is actually in the rest of the world’s interest for you not to find the needle. All those advertisements you are bombarded with day and night whether direct or more subtly via the current lazy mainstream media certainly don’t want you to discover it. They want you spending “twenty pounds and sixpence” and not “nineteen pounds and sixpence”.
Let’s therefore make this post a needle in the internet haystack and hope that some find it. If you’re reading this then feel free to Like or Tweet it, as every one of those places another needle in the haystack that might be found. Let’s detail the simple method that helps me save more.
Step 1: Prepare a Budget
A budget is no secret and I’m sure 99.9% of the population is already aware of what a budget is. Just about every personal financial site and book talks about them. While well known they unfortunately don’t give you any answers but they do give you information. They won’t help you save more but are a necessary first step as they:
- let you take a step back to see what the situation looks like;
- tell you how quickly you need to act; and
- tell where you should focus first.
If your budget shows you spending “twenty pounds and sixpence” then you clearly have an emergency on your hands. Every second that passes is seeing you move further into
debt which is then making it more difficult to ever get out of it. Mr Money Mustache ‘eloquently’ advises that in this situation the correct response is to treat it like “
there is a cloud of killer bees covering every square inch of my body and stinging me constantly!!!! I need to stop it before I am killed!!!” In this situation you need to get yourself to the point of only spending “nineteen pounds and sixpence” quickly.