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A Secret Too Rich to Keep

Psst…can you hear me? I have a secret I want to share with you.

It’s the kind of secret that can change your life. It’s a secret that some people would consider a holy grail. In fact, some people would pay vast sums of money to hear it. It’s a secret that, once learned, has been used by people of even modest means to attain untold riches.

You may be amazed to learn that the secret sits in plain sight. Yet, it remains mysteriously hidden, even elusive, for most people. That’s what makes the secret so incredibly powerful. And valuable.

What is this secret, you ask? Come in closer, I’ll tell you.

Let me recount a fascinating and quick story about a hard-working couple named Bill and Jill.

Bill and Jill married when they were 22 years old. Jill graduated college, but Bill never went. At age 25 they earned a fairly modest family income of around $50,000. Over the years they worked hard, moved up the ladder at their respective jobs, raised children, lived below their means, and genuinely enjoyed life.

When they turned 62, Bill and Jill retired. Between their nest egg of $1.6 million and Social Security, they had enough to entirely make up for their after-savings, after-tax take-home pay they previously received while working. They not only retired but retired comfortably. In short, they lived a charmed life.

That’s it. I guess I let it slip. That’s the secret. Are you impressed?

What? You didn’t catch it? It’s the secret that can change your life; that can help you build vast sums of money; that can bring you untold riches. It’s the secret that people would pay vast sums of money to hear. And it’s right there in black and white, sitting in plain sight.

You really didn’t catch it? The secret is four simple words. Four words that can transform your life.

Here they are: Live below your means.

You see, the trap that so many people fall into is spending up to – if not past – their means. While that sounds innocent it’s actually tremendously hazardous to your wealth. It works against you on two fronts.

First, you sacrifice saving for the immediate gratification of spending, leaving a pittance for your nest egg to compound over the years. Second, after years of spending at a certain level it is painful to take a step back and live a less lavish lifestyle. You couldn’t dream of living on less. That’s a problem.

Because you lived at – or at times, above – your means, Social Security and retirement accounts often can’t come close to cashing the checks your desired lifestyle demands.

Living below your means fixes both problems.

When you live below your means, you find yourself in the fortunate position of having an excess. That excess can be invested for retirement, allowing compounding to work its wondrous magic over time.

But you get a double-dip benefit when you live below your means. In addition to nurturing a healthier retirement account, you learn to appreciate a more modest lifestyle. When you get to retirement, it doesn’t take nearly as much to maintain your standard of living. In other words, you don’t need your portfolio to perform miraculous feats to continue financing your expected lifestyle.

Even more, living below your paycheck over time could generate enough wealth to pass on to children, grandchildren, or charities.

And it’s all possible by simply living below your means. Four little words that can make a world of difference.

That’s a secret worth sharing. Spread the word.

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