“Time is money” and “It takes money to make money.” are saying we have all heard yet what does this even mean? Between theory and practice is a world of difference. Logic is often missing from people’s reasoning around spending.
People will agree to these quotes yet do the exact opposite by acting as if their time is free, spending hours, months, and even years struggling alone or with a stop-go approach instead of investing in themselves and their dreams and in the meantime, overspending on things they don’t need.
I have been told by an individual he couldn’t afford to hire a coach, yet he was driving around a leased BMW all the while struggling with his business. I have been told by a client that a $15 per month service was expensive when this product can make them thousands monthly in a couple of months’ time. We overconsume on things that don’t matter, refuse to pay for things that will help us, then complain our dreams are unattainable.
Time to face the reality. In this article, I’ll talk about how winners don’t fall into the spending trap and instead, how they invest in themselves first. Keep your priorities straight and you are destined to win.
When setting life goals, people often focus on excuses. The most common two excuses are time and money. Typically, the time excuse links back to money, so a lack of finances seems to be the main excuse standing in the way. Not only that, but many attach their big life goals to having money or requiring money, but happiness is directly related to personal wealth. Whether we admit it or not, most of us tend to see wealth is the one driving factor that will solve a majority of our problems. Not only will it take away our daily worry and struggle, but it will give us the freedom and power to realize our deepest desires. There is nothing wrong with this belief and to some extent, of course, there is truth in it.
If you agree with me so far, then please ponder over my next question carefully: If the majority of people feel happiness is directly tied to wealth, why do so few sincerely try to get it? You may disagree and believe that most people are indeed trying to become more wealthy, but facts are facts. Just look at the statistics, and we will see only a handful of the worldwide population ever becomes self-made. Today, I’d like to argue one reason why I believe most people never become rich. It has little to do with their income, which can increase or diminish, and more to do with their spending choices.
The 4 Expense Categories
There are essentially four types of expenses we all have, starting from the bottom, which are:
- Basic Needs Expenses
These expenses are usually low, at least in industrialized countries, with no wars or political unrest. Basic costs include mortgage or rent, food, gas, and clothing. If you live in a household, they may be even lower since you share them with the other adults. We can also include mandatory expenses like taxes, insurance, medical bills, primary education, and emergency savings in this category. Generally, quality living costs are the main factor determining which country one would prefer to live in.
- Social Class Expenses
Social class expenses are the highest variable among all expenses, and unlike basic costs, they are entirely up to your standards. Social class expenses depend on one’s ego, choice of living location, personal comfort, levels of materialism, and desires to keep up with a lifestyle that you believe will impress your social circles. Don’t confuse these expenses with Basic Needs. You choose whether to live in an overpriced house, eat overpriced food, and pay for overpriced clothes. Materialists and insecure people consistently overspend here. Minimalists and self-confident people know better and keep these costs low. The same people who say they can’t afford to save money or hire a coach usually have houses full of junk, large TVs, and many things they don’t need.
- Family/Friends Expenses
Many of us end up spending a portion of our income on others. This reasoning is normal yet faulty. It includes dependants and close family members. You may feel pressure from them to buy or pay for things they convince you to purchase. Some people even go into debt to spend money on those they love by buying a bigger house, a second car, or designer clothes. It is the inappropriate use of your income yet understandable when your heart is involved. The solution is to combine managing your household income with a financial advisor and setting vital life goals, so you have a guiding light to help you stay on budget and say ‘no’ to poor spending choices.
- Investments / Self-Care Expenses
These are the best types of expenses because, while the other three categories sustain and comfort you, investments are the expenses that propel you to newer heights. Examples are real estate and stock, fitness and health, travel, experiences, continued learning, and personal and professional development. It is where I try to spend most of my money.
The Trap of The Mainstream Consumer
Many fall into the vicious dopamine/comfort/guilt/lie cycle of materialism, enabling and showing off to people they want to impress. It goes something like this: Buy things a bit over your price range to make yourself feel more worthy. Buy stuff for others to impress and win their love. Buy something to show off to your family and community that you are superior. Buy to make up for your unhappiness. Buy to forget you aren’t following your dreams. Any shiny new object will do for five minutes. Buy, buy, buy. We indulge, we splurge, and we make regretful purchases all the time. Look no further than associations that accept second-hand donations. Many of the clothing or home items still have price tags on them. And collectively, our debt numbers are shockingly high. As a society, we have fallen victim to a spending frenzy. And suppose you are in a couple or have dependents. In that case, even if you try to be reasonable, you can’t guarantee the entire family will be exempt from the temptations marketers have integrated into every aspect of our lives. It is a trap, and we must put an end to it.
The Blind Spot Only Winners See
The top of the expense pyramid is the secret to an extraordinary life. It is hard to climb because there are so many obstacles pulling us down towards the bottom, most of all, scarcity mindset, which is the most giant trap of all. If you can reach the Investment stage, you will have reoccurring income and create value instead of just consuming all that you have. Most people don’t understand this or think that way, which is why only a few are wealthy. Instead, the mainstream uses excuses like “I can’t afford education/a coach/organic foods/holiday/real estate, etc.” The reality is that their priorities are skewed. Instead of overspending on the middle categories and falling victim to lifestyle creep, personal insecurities, pressure from others, or lack of goals, one must realize that the most significant rewards can be found at the top. One should set an eye on the prize with focus, discipline, short-term sacrifice, faith, and persistence.
“I am concerned that too many people are focused too much on money and not on their greatest wealth, which is their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes. If they think money will solve the problems, I am afraid those people will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”
― Robert T. Kiyosaki, Rich Dad, Poor Dad
Tony Robbins’ First Investment Changed His Life Forever
At 17, Tony Robbins was a janitor. He decided to spend $35, which was at the time an entire week’s salary for him, on a Jim Rohn personal development seminar. He started working for Jim Rohn and by his mid-20s, he had developed his own unique style of performance coaching that made him successful. Now in his 60s, Tony is the leader of Tony Robbins Holdings, a conglomerate of businesses in industries as diverse as hospitality, education, media production, business services and nutraceuticals making over $6 billion annually and a best-selling author six times. One can clearly see that the $35 investment, which probably felt like a fortune to him, has paid off.
“Leaders spend 5 percent of their time on the problem & 95 percent of their time on the solution. Get over it & crush it!” -Tony Robbins
Lady Gaga Never Fell Into The Money Trap
Stefani ‘Lady Gaga’ spent several years working tirelessly for success. During the early years before her career finally took off, she faced numerous setbacks and regular rejections, being told by her own boyfriend that she wasn’t going to make it. She was dropped by her first record label after only three months. But giving up wasn’t an option, and her focus paid off. She has won 12 Grammy Awards, 18 MTV Video Music Awards, 16 Guinness World Records, and numerous other accolades. In addition, she is highly active in philanthropy and has created a foundation together with her mother called Born This Way to support the mental health of young people.
Fight and push harder for what you believe in, you’d be surprised, you are much stronger than you think.
— Lady Gaga
Serena Williams Had Her Priorities Straight
Serena Williams is considered one of the greatest female tennis players in history. You can see her impressive list of major titles in singles, doubles, and mixed doubles on her website here. With nearly $29 million in prize money and endorsements, she has also been listed as the highest-paid female athlete of all time. But Serena wasn’t born with a silver spoon in her mouth. From a large middle-class family, including several half-siblings, she worked her way up to fame. Reaching stardom wasn’t easy and throughout her career, she suffered career setbacks numerous times yet in the end, she always made a comeback. After such a successful tennis career, many athletes would opt to retire comfortably, but not Serena. She now has multiple businesses, including a fashion line, a jewelry business, and a venture capital firm.
“I am lucky that whatever fear I have within me, my desire to win is always stronger.” – Serena Williams
Winners All Have Similar Spending Habits
1/ They take risks, investing time and money all towards their dreams
2/ They don’t overconsume or get caught in middle-class spending habits
3/ They focus on their work first over material possessions and almost all self-made live humbly and simply during their early career years
4/ They invest in the right mentors from day one
5/ As they grow, they keep re-investing in themselves in increasing quantities
The Solution to a Happy Life
The biggest irony and tragedy of modern life is perhaps the fact that we lie to ourselves. We consume to feel better about our lives, yet the very things we know would make us happiest are the things we are the least willing to invest in. Examples: Spending time with family. We say this is a priority, yet we are always busy working for income. Contradiction! Take a look at health. Everyone says it is a top priority, yet sitting is the new smoking. Travel is one I often hear yet few ever realize their dream. We trap ourselves by not prioritizing expenses, then say we don’t have the money to invest in the very things that could free us. If one wants to achieve a happy life, it starts with being honest and waking up to see the truth of our behavior. Set clear life goals and a life mission, then map up smart goals to achieve them, and direct all your spending accordingly. It really does come down to this. Just look at winners like Tony, Stefani, Serena, and many more to see they invested in themselves first and that is the true secret to happiness.
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