Often times, we wonder, how is it possible that the rich get richer and the poor get poorer? What are those things that the rich do but not the poor? How is it that a successful entrepreneur becomes a pauper overnight? This may just give us insight.
- Financial humility. “Cut your coat, according to your size”, so goes the popular quote but it seems like these words of wisdom have been thrown out the window for some entrepreneur who has found themselves stuck in financial stagnancy. Billionaire investor, Warren Buffet, currently at a net worth of over $86.5 billion, never saw the need to change his house which he bought in 1958 for $31, 500. He also spends nothing more than $3.17 for breakfast and still uses coupons. Jeff Bezos, founder of Amazon, didn’t see the need to change his modest Honda accord despite his billionaire status. How then is it that after making a few thousand, you want to buy a duplex that has more rooms than you would ever need? Why do you go for things you don’t need? There is no rule that says for the fact your business is beginning to make profit, you have to take up the reckless spending habit. Star of ABC’s “Shark Tank,” Kevin O’Leary would rather make his own coffee at home instead of spending $2.50 on a cup of coffee. Be wise.
- Stay off debt. One thing the rich avoid like a plague is debt. Granted there are some necessary loans entrepreneurs may need especially to startup or scale up their business. If you must borrow, then be sure to pay off as quickly as possible. Borrowing cuffs you to the chains of debt, and you never get to enjoy financial freedom, which ironically would probably be one of your top 5 reasons why you became an entrepreneur in the first place. Debt is terrible and never a good thing to hang around your neck.
- Invest always. Learn to make your money work for you even while you are asleep. Instead of just saving, the real secret to becoming more wealthy is investing. In his conversation with CNBC Make It, O’Leary said, “When you’re 21 years old, or 20 or 18 or 19 and you start putting aside 10% of what you make, you’ll [have] over $1,000,000 by the time you’re 65.” Warren Buffet explains investment as “being at the top of a very large hill with wet snow and starting with a snowball and getting it rolling downhill.”
Be prudent in your spending and don’t get carried away by it all. You can lose your money just as fast as you make it. Dave Ramsey said, “You must gain control over your money or the lack of it will forever control you”.
PHOTO CREDIT: Connect Nigeria