Thursday, August 27, 2009

How to Get Rich

Who is rich? He that is content. -- Poor Richard's Almanac

On there are over 3000 books that purport to show people how to how to get rich. Most of them aren't worth the paper they are printed on. On TV there are numerous infomercials selling some course in how to get rich for hundreds of dollars. They aren't worth a darn either.

Let's face it, getting rich is simple. The formula is tried and true, and can be summarized in a few straightforward bullet items:
  • live simply
  • spend significantly less than you earn
  • save the difference
  • compound the savings at a rate significantly higher than the rate of inflation
  • let time work its magic
The details are left to each individual to work out. The difficult thing is ignoring the constant noise that tries to convince us we need the latest electronic gadget, a new car, new clothes, another credit card, the envy over what the next door neighbor just purchased, or the latest get rich quick scheme. But if the average person is disciplined, selects investments that produce decent returns without taking undue risks, wealth can be built over time and security achieved.

This advice may sound like a collection of empty platitudes or a lesson from a Sunday School teacher. But there are numerous examples of people with modest incomes being successful using this approach.

1 comment:

  1. Empty platitudes, indeed. I live on $800 per month - that's living extremely simply.

    But how am I supposed to spend significantly less than I earn when housing (a rented room in a house with six others) consumes more than half my poverty-level income?

    A free market in housing would mitigate my housing costs, but I kinda doubt you support a free market in housing.