Food for thought: Wealthy is a behaviour, not a destination.
Money is a tool
Someone is wealthy when they value the money they have and look after it. This means not spending frivolously (like the aunty who liked to shop, and who I always saw as wealthy), and it means using money to grow more, rather than spending it all.
There’s an African fable of two brothers who were given grain to feed their families during a famine. The oldest brother, in his arrogance and belief that he was entitled to receive gifts like this, cooked all of the grain to feed his family and to entertain his friends. The younger brother set some of the grain aside, and prepared it to be used as seed to grow further crops. This meant that he didn’t have enough food to entertain, and was often scorned for achieving so little with his entitlement.
I’m sure you can guess how the story ends. The younger brother ends us being the wealthier of the two, “investing” a portion of the grain he harvests each season to grow his fields, until he is eventually supporting his own brother.
Where it starts
All of the money examples and role models in my life have been about spending money, and it was always accompanied by the strong sense that it wasn’t enough. Not really. And so we borrowed money, and that’s how I learned to borrow to spend.
But we borrowed it for things that looking back were nice at the time, but not absolutely necessary: things like a new car, holidays in Africa, gym memberships.
Fast-forward a decade or two, and when we started the business, we cut back on every expense that wasn’t necessary: gym memberships were cancelled in favour of walking the dog, running, and home yoga. Holidays were cut back from visiting relatives at the other end of the world (literally) to camping holidays and spending time together as a family.
“Wealth consists not in having great possessions, but in having few wants.” ~ Epictetus
The Cupboard of Doom
In order to make it work, I faced the big messy disaster that was our finances. I started tidying them up. Looking back, it’s exactly the same as sorting out a cluttered, over-crowded room or wardrobe that you haven’t dealt with in years. You know – most of us have a “cupboard of doom” where you’re almost afraid to open the door in case everything spills out and you can’t shove it back in again.
So that’s how it started. First, just tidying up so that I could clearly see what we did have and what we didn’t have. At the time, that was scary – it was an intense time that involved coming face to face with just how much debt we “owned”.
Then, I built a budget. I wrote out all the things we buy and need every month (bills, food), as well as the things that happen annually (car service, house insurance). I then collected info on things we needed to pay every quarter or so, such as violin classes, dance classes, birthdays.
Once I had a clear idea of what we needed, I took a look at what we had. That’s when I realised that we just weren’t set up to handle the annual or non-regular payments properly. We weren’t planning for them, so each time they happened, it felt like a shock, and it came out of the credit card.
So, I realised that if we were careful, we could put money aside each month, so that we had it already saved by the time the car service or dance exams needed to be paid for.
Looking back, I think that’s the first time I ever really started budgeting properly. After about a year of doing this, I realised that I wasn’t panicking about money anywhere near as much as I used to. It was working.
“Wealth is the slave of a wise man. The master of a fool.” Seneca
I think this is where I was going with this originally. Being wealthy isn’t about never having to think about money again. I’m beginning to realised that being wealth is about being responsible with the money you have, and looking after it.
(Continued in Wealthy Habits of a Stoic)