The best predictor for future behaviour is…
True story. Two friends meet up for coffee. One of them is a self-made millionaire, the other one is broke. Here’s part of their conversation.
“So how was your week?”, asks friend #1. Friend #2 smiles and replies: “Great, I just got myself a brand new 42-inch flat screen TV! Sadly enough my DVD-player is outdated now, so I need to upgrade that too haha.
And how about you, did you buy any gadgets lately?”.
“Yes!”, exclaimed friend #1 proudly, “I made an investment in silver! I just bought 15 kilograms last week.”
Can you guess who’s rich and who’s broke?
In five, 10, 15 years from now, friend #1 will be richer than he already is. Friend #2 however, will still be broke. Why? Because of their spending habits…
Let’s face it, poor people spend most of their time and money on things that give instant gratification and status. Rich people spend money on things that grow in value or produce cash flow.
Then, with the interest or return on investment, they buy the toys, the cars and the gadgets. They aquire assets (real estate, businesses, stocks, etc.) and then live of the returns, without touching the principal.
Ask yourself: what percentage of your income/savings do you spend on instant gratification stuff? And how much do you spend on acquiring assets?
Let me know you insights in the comments!