This isn’t a post about being a Scrooge this holiday season, but I do want to share a perspective that is too often overlooked, but might actually be the missing piece of long-term financial success:
Get greedy with your money.
Heck, I’d even encourage you to get greedy with your life, but we’ll get to that later. What I’m saying is, if you want to be rich, you have to want more from your money. You can’t want “enough”, you have to want excess. You can’t merely strive for “debt-free”, you have to push for “financially independent”. You can’t think “$40,000 per year would be perfect”, you have to say, “I have to make the most money I possibly can”.
I’ve shared this point of view before and received some deserved criticism. I understand that wealth isn’t the be all, end all for everybody (no matter how ironic that strikes me for subscribers of personal finance blogs), but for those of you that don’t want to worry about money in your 30′s, 40′s, 50′s and beyond, you need to stop settling for just ok and start pushing yourself for extraordinary.
When you’re just starting out, it’s reassuring to know you can get ahead by just contributing $25 per month to your retirement accounts. You’re new mantra is, “at least I’m saving something!”. You add it up with compounding over the rest of your working lifetime and realize it comes to tens of thousands of dollars at 65, and you pat yourself on the back because that’s way more than zero and it was totally painless.
Shut up, you can do better.
The second you’re comfortable putting $25/month into your retirement accounts, double it and then double it again. Keep increasing it until it hurts just a little. You’re not saving enough until the moment comes when you have to turn down a dinner out or a purchase with, “oh, I can’t afford that because I need to contribute x amount to my savings this month”. You have to be greedy with your money. The easiest way to become wealthy is to want it more than anything else.
I’m sorry that it’s not easy.
Savvy PF loyalists don’t blink at my suggestions to use 40% of your income for savings and debt repayment, but occasionally I’ll get a comment that my tactics are unrealistic. There’s a lot of people out there that say things like “well, this is easy for you because…” and they cite my income (before I quit, anyway), my education, my lack of mortgage or children, my free time, my skills/talents, my opportunities, whatever. I’ll admit, sometimes I got a lucky break or two, but most of the time I didn’t.
The truth is, I’m just really greedy.
My insatiable lust for oodles of disposable income is more or less the sole motivator behind all my financial behaviour. I like to spend money. I like to spend lots of money. But unlike most of my hyper-consumptive counterparts I recognize the only way to sustain spending lots of money is to make sure I have lots of money to spend, and the easiest way to do that is pile up as much of it as I can behind me.
I don’t want to live on $20,000 per year. I don’t want to cut costs in order diligently save a few hundred dollars a month for my future children’s education. I don’t want to count pennies in retirement.
When I see an amount I need to pay for something I want, I want to shrug at it, write a cheque, and move on.
This isn’t a bad thing to want, so long as you’re willing to work for it. If you’ve had the
misfortune
delightful experience to work with me in the professional world, you know that I will negotiate my salary with an insistence that might be described as “bullying”. If you’re friends with me offline you know I’m usually entrenched in 3-4 side projects to generate additional income. If you have to sit next to me in class, you know I’ll spend at least 3/4′s of the lecture on Yahoo! Finance looking to maximize the return in my portfolio.
Whenever I am offered money, my first reaction is always the same:
That’s not enough, give me more.
More often than not, I’m asking this of myself. ie. “Saving $25/mo in my RRSP savings account will only generate $4 per year in interest - That’s not enough, give me more”. Greed can be good. It will push you to do more than you would otherwise. You don’t have to live your entire life at the mercy of your budget, you can create enough wealth that money will never be an issue. So stop selling yourself short, and start pushing yourself harder. Get greedy.