A lot of people think that wealth is about living like rappers and entertainers. People want to make money so they can buy cars, eat lobster, and wear Gucci. While that is appealing, wealth is about more than looking good and eating “scrimps”. We live in an economic society and an abundance of wealth opens doors that lack never will. Wealth is bigger than you and your Instagram likes. Wealth thinks generational and you can’t create a lifestyle that spans generations by pouring every dollar you have into looking good, you have to scale back to create reserves and then invest the reserves. Then after you have those reserves you frugally live off the dividends or the cash flow so you can still trim off reserves from those streams.
“Live in such a way that your children’s grand children know your name”
Wealth is about having the ability to go through any hardship and not lose a stride. I like the Grant Cardone quote that “if you have money to solve a problem then you don’t have that problem”. In life, a lot of people go through struggles and problems that could be solved by wealth. Your kid gets sick, your car needs work, your family needs to eat, these are all wealth issues. Everything is a wealth issue.
Because the culture tends to buy what they want and beg for what they need, a lot of times we don’t have money for the needs. I see it all the time. In Watts customers will show up with a arm full of gold and the hottest sneakers but $2 to buy something to eat. That is ass backwards and food isn’t the only place where these people are falling short. They spend so much on shoes that they can afford tutoring for their children, they cant afford to reinvest in the community to make it look nice, they cant afford healthcare, they cant afford all of the things that actually matter. That is where wealth, in the right form, comes in. If you have wealth to meet your needs, you don’t have that need. A life without needs is immunity.
Wealth is cash that is not obligated to liabilities. Wealth is amount of days forward that you could live without working living off of your savings or investments. Financial freedom is when the amount of money from your investments exceeds your bills. The way that you attain wealth is to be prudently frugal and selectively extravagant. The way to be broke is to buy the newest and hottest of everything.
There is a common misconception that in America it is the people with the newest and hottest of everything that have money. This is conveniently sold to us through media, through television and movies. It is sold to us to sell products but this version of wealth could not be further than the truth. The book the millionaire next door highlights that America’s wealthy (wealth, not rich) tend to drive Ford F-150s and live in an average house in an average neighborhood. I know this is true for the millionaires I have strong ties to. Wealth isn’t about stuff, wealth is about immunity, peace, and having your money work for you.
1. Wealth is Immunity
The end goal of wealth is self reliance and a stress free existence. Wealth is the goal because in America, the only thing that matters is cash. Not Gucci, not depreciating luxury cars and not Instagram likes. Cash. Cash makes things happen and cash is immunity.
A few weeks ago I had a conversation with Lisa Phillips on my Podcast, the Todd Capital Millionaire Podcast and she told me a story about her cousin who got caught stealing and would be sent to jail if they didn’t pay the $250 fine. First, the lack of wealth is what forced this man to have to steal but that isn’t the kicker. The kicker is that his family couldn’t afford the fine. This meant that he would be sent to jail over $250 bucks! He would have a strike on his record for $250 bucks, but I bet you he had them Jays though… #gotthemjaysthough. The bright side of the story is that since Lisa and her family live frugally they could pay the fine for her cousin. It was the cash that saved him, not his Gucci belt.
2. Wealth Keeps the Peace
This morning I called to settle up some things on account that had fallen behind. I told them I could pay them a certain number that I could more than pay, they countered at a higher number and I paid them even more so that it was solid round payment. The excess cash allowed for the conversation to be a smooth conversation which allowed my morning to go smooth and it allowed me to conquer the new opportunities being thrown at my business.
That is just one example. Most arguments in marriages are based on money. Most arguments with baby mamas is based on money. Most of the reason you are angry at your job is because you feel like you aren’t paid enough. Money can create conflicts but it can also solve conflicts. Wealth keeps the peace. If you have the money to give your wife or baby mama you tend to not have conflicts with said wife or baby mama. If you have cash from other sources, you tend to be able to handle the job that doesn’t pay you what you are worth while you look for one that does. The key is wealth, not argument, persuasion or rationale. The key is paper.
3. Wealth Goes to Work for you
When I just got out of college I wanted a beamer, bad. Every time I saw one I would salivate. I test drove a few and just never pulled the trigger. I currently own a pre owned Lexus (meaning I bought it after the depreciation) which I bought because it is much more reliable than a beamer. That isn’t the point of this paragraph though. The point is that now whenever I see someone driving a brand new luxury vehicle all I can think about is the cash flow that person could have bought with that creditworthiness.
It hurts my heart to see people driving around in 50k vehicles because that 50k could have been invested into a 5 different 50k properties. Those five properties would kick off the 1k per month to buy your car AND you will have the other benefits that come with real estate. This is because you put wealth before the stuff. Wealth comes first.
Even if you own property, you could always own more. I just don’t think our culture is in a place where we can start throwing away money. We don’t own enough to be that haphazard with our soldiers. Each dollar you have is a soldier and you are either sending them to work or you are sending them to play. Buying nice things is just playing with your money and playing doesn’t lead to profit. It leads to delayed struggle. Sending your dollars to work will set you up for the bigger wins down the line and they will create the wealth that is immunity.