You dedicate $100 to your savings every week from the ripe age of 20 up until 30. You work a difficult job, in the harsh oil sands of Alberta, Canada. After 30 long years you have ended up with $144,000, that’s great! That is a ton of money you can spend on whatever… right?
No. Due to inflation, you will have only ended up with $67,000.
The advice of saving and investing when you’re young is no longer realistic. It’s not useful because there’s a floor to saving, but no ceiling to making money. Your return in years will be negated by inflation.
Conversely, working on cash flow when you’re young is great because if you work hard enough you have the potential to be paid whatever you want.
Why has saving money become irrelevant? Because the economy is changing very fast compared to the baby boomer era. Millennials are struggling to deal with the student debt problem. They’re struggling to climb onto the property ladder. Jobs require more qualifications.
In 1950, a high school graduate was a homeowner who would support their entire family off a job in the local factory.
In 2021, a college graduate rents an apartment and can’t support their family on a white-collar cubicle job.
It was foolish to expect it to last like this forever. Life is currently reverting to how it’s supposed to be, salvation is in the struggle. The winner takes all. Truly, these are exciting times to be alive.
There are many different explanations for these changes: wealth inequality, subsidized student loans, lobbying… you name it. The bottom line is that you can no longer get by working for a minimum wage job your whole life.
To be successful in today's job market, you need to have a skill. This will either lead you to a good job or the opportunity to start your own business. Don’t know where to start? Here are some general skills that are starting to be valued:
- Any skill that creates an asset (software developer, real estate developer);
- Any skill that buys and sells assets (PE, VC, hedge fund);
- Any standalone skill that can create a business (affiliate marketing, any skill you can consult on, etc).
Investing in yourself can be much more valuable than investing in a company, the ROI is proportional to how hard you work; which in theory, means there’s no limit to how much you make.
Suppose you spend $500 to make a marketing agency and work towards one business deal for a month: that single deal for your agency generates you $10,000. That’s 1,900 coffees you don’t have to skip!
Don’t get me wrong…
It’s important to understand the basics of saving.
But that’s such a small part of it that if it’s all you focus on, these days you’re basically dead in the water.
For this reason, I believe people who take high risks tend to do so much better than your average Joe.
Not convinced? That’s ok. If you do choose to save, make sure you at least save correctly. Use something like a whiteboard notebook or excel sheet so that can lay out all your expenses — it’s easier to keep track of cash flow.
I bought a whiteboard notebook and within a few weeks, I was starting to get an idea of all the things I was wasting my money on.
Now?
My customers are happier than ever, my revenue is higher than ever, and best of all I no longer have that empty feeling inside me.
Jokes aside, reusable notebooks were seriously one of the best investments I’ve made.
If you’re saving and don’t yet have a cunning saving strategy that tracks where your money goes, I highly recommend picking one up.
Your talents can make you more money than saving. I could go on about skills but that’s not the premise of this article. I’m simply here to say that you need to invest in yourself.
Throughout human history, people always looked up to their elders for guidance.
The world is changing so fast now that it’s almost lethal to listen to someone more than 15 years older than you are. The advice of saving is no longer realistic.
Regardless of your age, there are many ways to become richer. But I can assure you, saving $5 on coffee every day is not one of them.
