One of my friend once told me that if you are smart, you can divide your income into two categories: salary and savings.
But if you are not, there is just one thing: expenses.
It's not what you make but what you keep
It's not that I have never made enough money in my life. I was lucky a number of times, both in my career and in my investments.
I have made enough.
But I have spent recklessly. And I have traded crypto foolishly.
I learned the lessons about money the hard way.
Now, when I look back, I can clearly see how easy it is to become wealthy. Only if I had known all these lessons early on.
Or maybe it's the life's way to teach wisdom.
Lesson 1: Be Humble And Keep Learning
People who are certain about everything, who believe that they know everything are the ones who never grow much.
Those who want to grow, understand that they don't know enough.
When I was making good gains while trading crypto, I never listened to anyone. I thought I have figured it all.
So, I started spending all my gains instead of saving. And when the tides turned, I was losing money. My expenses made me nervous. I traded with more leverage. And lost more.
Because of these crucial mistakes, I lost a lot. I repeated these mistakes many times in the last 4 years.
Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day if you live long enough like most people, you will get out of life what you deserve. — Charlie Munger
Very few people have habits to invest their time and money for a long term.
I am not one of them. But slowly building these habits.
Lesson 2: Don't Be Stuck
It takes curiosity and risk appetite to figure out more ways to make money.
You have to be unsatisfied with your current situation so that you actively look for new opportunities to make money.
The reason most people are not able to build wealth is because they are stuck.
They are stuck either due to their limiting beliefs about their potential or because they don't actively look for more opportunities.
They just complain about falling short of money every month.
I believe that complaining about your current situation is worthless. No one is coming to save you. No one will work to change your life. Some people may understand your position. But no one can make your life better except you.
It's better to do something and change your current situation than to sit idle and do nothing.
Be Unsatisfied with your Current Situation
Otherwise, you won't have enough motivation to take strong action that will help you grow further.
The frustration will help you find newer opportunities.
Lesson 3: Look Beyond Your Current means
I keep searching the internet for nuggets of wisdom. One tweet hit me hard.
Earn with your mind, not with your time. — Naval Ravikant
I have tried a job and a small business. They are both risky.
Unless you are highly skilled and working for a fortune 500 company, the future is always uncertain for you.
Your best bet for the future is to make multiple small bets. Look for multiple ways to invest in yourself.
Learn new skills. Seek new opportunities.
In short, diversify yourself.
Also, it's better to look for things that can scale. Things you can leverage in the future for your time.
For example, hive. Or small scale investments in cryptocurrency. Crypto Games. Building communities. Building things.
A single source of income will leave you in a loop of earning and spending, and you have to manage in between. This loop will eventually lead you to borrow money. Debt is a nasty trap.
Similarly, knowing only one skill will leave you dependent on that skill only. Learn multiple skills, develop multiple earning sources.
It takes years and years to achieve results. But it's worth it.
Lesson 4: Play The Long Term Game
Building wealth is slow.
If you actively invest in something, the growth is super slow in the first few months/years.
When you learn new skills, the growth in the first few months is slow. When you invest money, the growth in the first few years is slow. Usually it takes years to decades to see the actual growth. To see what's possible.
Not everyone is ready to put in that amount of time. It's simple but not easy. Because nothing that's worth doing is ever easy.
The compound effect
If you work on your writing/coding skills for years. Your skills will compound.
You will get paid better.
Skills, investments, networks. They all compound.
If you can wait for a decade, your investments with your money will compound.
If you can be patient enough to practice your skills for a decade, you skills will compound.
If you study and experiment business ideas, your execution abilities will compound.
All good things compound.
I never had enough patience to wait. That's why I missed dozens of opportunities to get rich in crypto.
I never practiced my skills consistently for a long term. That's why I am still average.