Quote:
Originally Posted by Unregistered
I think you forgot to key point, Person A who makes 4x more than Person B may not spend 4x of Person B. Therefore, Person A will be able to save >4x Person B. With more savings and more capital, you will have more guts to invest more and it exponentiates.
For example, I used to make $4K/month today and today I make $20K/month. At $4k/month, I had hardly any savings because my expenses then were about $3K/month and so I saved $1k/month. Today I make $20K/month, my expenses are about $10k/month including taxes, so I save about $10k/month. Therefore although my income grew 5x, my savings grew 10x. After a point, every additional dollar will fall directly into savings.
But your view is right, the right career and high income generation plays a critical role in networth generation.
John
|
I absolutely agree that high income, and not low expenses, plays the most critical role in networth generation.
When your income is low, there is only so much you can save, and even the most essential expenses will take up a disproportionately large portion of the income. Despite being a skinflint, it took me almost 15 years to save just $1 million and in the process deprived myself of many things which I now look back with regret.
However, unlike the majority of people in this thread who have a structured career path leading to a high-paying income, mine involved a very high element of chance. Therefore, there was no way I could know in the past what the future would hold for me, and that $1 million I saved could very well be the only million I have.