Along the road to building wealth, some of us will inevitably be
diverted by the "peer pride" effect, where we feel the need to show
off the money we've made by buying expensive goods. This phenomenon
brings us one step closer to the proverbial "Keeping up with the
Joneses."
My 16 year-old daughter recently started her first job, and so
far so good as far as saving money goes. She is following the
discipline of needing to have money saved up to build her financial
foundation. The next step of course is for her to invest it in
assets that can produce income. The big challenge she will face is
when she gets back to school and sees the latest must-have threads
and gadgets that every kid in her school is showing off.
Fortunately, she is not super-materialistic, so she will likely
avoid following others down that path.
As we get older, our financial issues change, and the odds of
having discretionary income to spend money on whatever you want
tends to narrow dramatically. We all rack up constant expenses
(rent, mortgage, car loans, utility bills, insurance, etc.) that we
didn't have at earlier phases of our lives. As the bills continue
to mount, frustrations can make individuals jump off the tracks of
their wealth-building plan. Some will even question the point of
saving so much. "You only live once," after all. Suddenly, after a
quick spending binge, a small mountain of debt is accumulated, and
the road to wealth is much rockier.
Money is great to have, but it needs a purpose. Spending money
on yourself to enjoy the finer things in life isn't a bad thing,
but I suggest you make a pact with yourself, for example, to invest
$2 for every $1 you spend on personal wants. I wouldn't mind seeing
that ratio even higher from an investment standpoint, but it's a
start to getting back on a reasonable road to building wealth - all
the while enjoying life in the interim.
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Thank you for sharing part of your weekend with me, and please
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