When I was in school, I was always told that to become rich, you should study hard and land yourself a good job, enjoying life. The assumption is, once you secured yourself a high paying job, the rest your finance would take care of itself. Conversely, the opposite was implicitly assumed: get a poor paying job, and you would be doomed with financial hardship.
Now, compare that with the following. Janitors sometimes make the headline for donations in the millions to schools. The only reason that these make the headline, is the assumption held by the teachers in school, that you simply cannot be rich earning so little.
While this is true for most of the case, the opposite does not necessary hold true. Despite it being much more harder, it is not impossible to end up with millions in your portfolio with little wages,
The Problem with Earning More
Having a lot of cash is not going to do you any good if all you are doing is to squander it away frivolously. What it does, when you have lots of cash, highlight and amplify any financial weakness you may have. Even if you earn a lot, they will be gone in the next moment if you are careless enough with your money. Money flees from those who do not know how to care for them.
It sounds obnoxious, but it is true; money does come to life and mold itself after its owner.
Consider this, 78% of NFL players are either bankrupt or facing severe financial hardship 2 years following 2 years of their retirement. What makes this very unusual is considering that the lowest paid NLF star received $310,000 which is approximately 5 times the amount earned by an average person.
Would this be enough to convince you why earning a lot does not guarantee financial freedom? It helps to earn a lot, but unless you harness it instead of letting it control you, you would never attain the sort of financial freedom that you dreamt about.
The Insatiable Consumption
When you get a raise, what is it that you do with it? Do you reward yourself with something nice? Buy yourself or your spouse something to celebrate?
Unless you are sensitive to all your spending and keep an eye over your bank account like a hawk, you will most probably spend away the income.
But you will notice that like almost everyone else, most people tend to end up with roughly the same amount at the end of the year.
"Yet, thou do not all earn the same. Some earn much more than others. Some have much larger families to support. Yet, all purses were equally lean. “
-Extract from The Richest Man in Babylon