Financial experts are always talking about cutting the small things. You can cut out coffees, cable, dinners, lunches, until the cows come home but still never get rich. And lose out on little pleasures. As a financial writer I am guilty of suggesting that people cut out coffees and lunches too but I always make it fun (by suggesting you get an awesome My Little Pony or Star Wars lunch box).
It's the good "Big Rocks" that can actually make you wealthy (or poor) so let's concentrate on the big rocks! Large items that can make you poor are things like expensive dinners, cars, boats and big ticket clothing. And then things like business equity, investments, and property are the big items that make you rich.
Good "Big Rocks"
Investments: The math reads that $800 a month at eight per cent for 30 years will make you a millionaire! Put loads of money into your investments and you'll become rich. Use your RRSP, TFSA, or a simple investing account to plow lots of money into and then let it grow. If the market performs like it has over the last 30 years, you'll be golden.
Property: Buy as much property as you can afford. The key is afford. Many millionaires simply bought a home, paid it back, rented it out and then bought another home. Then did this over and over again. As long as you can keep the cash flow positive a home will be a great "big rock" over 30 years or more.
Own A Business: Small business owners are the people in society that can make the most money. They can have a small successful business and draw salaries that are higher than even Captain's of Industry. Then they sell it when they are ready to retire making millions. Having any kind of equity in a successful business is a way to get rich.
"BAD Rocks"
Clothing or Crap: Spending too much on expensive clothing or other crap is a bad big rock. Items that you must have but then are out of style to next year and you have to go buy more. It's also easy to shop for the sake of shopping and having a closet full of inexpensive clothes that you don't even wear or use.
Too Much Home: Your home has been a big gainer in the last 10 years in big cities and everyone out there wishes they had as much real estate as they could get. If someone loses a job, a pipe blows, a roof leaks or your property taxes go up, you can be in the poor "house." No pun intended. Make sure your real estate doesn't take you down. Be able to afford the house you buy and save for a bad day.
Cars or Boats: I LOVE cars but these are one of those big expenses that add up month over month. Boats are the same way. They can be great fun but the storage, insurance, fuel and maintenance. Having too many cars can add up to a big drain on your finances and compounding insurance, fuel, and repairs can make it even worse.
Bad Business: Having a business blow up is another sure way to the poor house. It's hard to be an entrepreneur and many businesses don't make it. Make sure when starting your own business you don't lose money that you can't afford. Using money from your home, or family who can't afford it is not the way to do it. Make sure that your dreams of your business don't turn into nightmares.
So pick one "BAD Rock" that will be your vice and then take advantage of ALL three good "Big Rocks" and you'll be a money champ. Then you go out for lunch and have a Starbucks EVERY day once you're filthy rich.
My new book From Middle Class to Millionaire covers these big rocks in detail.
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