Ep # 3: Create wealth from salary.

How much do you earn? Well, that’s a question which would offend many of us. Isn’t it? So, what’s the right question? Let’s find out in today's episode. 

It’s time to have a word with me, Rajive Dhavan.

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Transcript

Create wealth from salary.

How much do you earn? Well, that’s a question which would offend many of us. Isn’t it? So, what’s the right question? Let’s find out. 

It’s time to have a word with me, Rajive Dhavan.

The real question should be, “How much do you save?”

Most of us are always looking for ways to increase our income. But as we earn more, we realise we need more comforts and luxuries in life. And the capitalist world around us makes us feel incomplete for not having things we don’t even need.

Thus, begins the loop. The loop of making more money and increased spending continues. That pair of jeans which once felt like a waste of money, suddenly begins to make complete sense.

We begin to justify the need for that fancy pair of jeans in our heads. We build the perfect story to convince our minds. And it doesn’t take much work either. It’s almost a seamless process.

What’s next? We fall deep into this loop and begin to spend our money before we earn it. The instrument we use for this is called a Credit Card. The debt slowly begins to build up. And our frustration and complaints of not having enough money are almost as bad as when we were earning 1/3rd of what we earn today.

Unfortunately, there’s also a sense of comparison that creeps in by looking at peers. We keep working hard, and we continue to work harder to spend the money we’ve not even earned. It’s extremely difficult to get out of this trap. But if you talk to some self-made millionaires who’ve made some real wealth, they’ll tell you how they managed to stay way below their means for a very long time to reach where they are today.

Then there’s another theory which says that the salaried class can’t really make a lot of wealth. That’s not completely true. While the salaried class have a decently high tax burden, making real wealth is still possible. But one needs to follow a discipline to save a good chunk of what they earn, then they need to invest this money, and finally, one needs to nurture their investments and give them time to grow. 

In most scenarios, self-made millionaires don’t accumulate wealth overnight. And once you create that wealth, it is extremely important to know how to retain it. And those who’ve worked hard and invested time to accumulate their wealth will generally be better at retaining it. At least compared to those who’ve made money through lotteries and stuff. 

I am sure you’ve heard of a lot of cases in our country and abroad where people won some lottery or prize money, and it didn’t last more than a few months. This is where financial literacy and money management come into play.

So yeah, next time you look forward to an appraisal, ask yourself if you can save more than what you used to. Your only competition is you.

I don’t intend to sell the idea that you should starve and save. But yeah, cutting down on expenses that don’t add much value will help you move ahead in your journey. While at it, don’t forget to look for small, recurring expenses that go unnoticed. But slowly, these can turn into big mountains of expense. A small leak can sink a ship. Remember? 

Those subscriptions you don’t use, and high-interest rate debts like Credit Cards negatively impact your financial health. So, get rid of them as soon as possible. If you look deep, you’ll find many other places that deprive you of good financial health.

Hence, it’s your mindset that drives your financial situation. Change your mindset, fix the loopholes in your spending, and suddenly you’ll see that you have more than what you’d imagined.

Finally, I’d like to tell you about a man called Ronald Read. This man worked as a Cleaner in the US and amassed over 8 million US Dollars in his lifetime with a meagre salary. What did he do differently? He lived in the same house for decades, maintained a basic lifestyle, and invested his savings in the US Stock Markets Index funds. He didn’t become an overnight millionaire. He was consistent, lived frugally, and nurtured his investments by giving them time. 

So, stop using the excuse that you can’t do it. It’s simple. All it needs is the right mindset. 

I hope you liked this piece of content. If you did, please share. I’m sure you’ll positively impact someone. Thank you.