The mind, of course. Having read a lot of Ayn Rand we know that for sure. But where are you supposed to go from there? You have your mind, you have your own personal finances to manage, you want to develop wealth. But what’s the foundation of wealth?
Savings are the foundation of wealth.
You may be the highest earner in the world, but unless you’re saving some of those earnings, not even just the tiniest fraction, you’re not going to build wealth. It’s never going to happen. Nor will it happen for the lowest paid worker. Notice I said build wealth. You might acquire money through an inheritance or a windfall, perhaps even a substantial lottery win, but blindly holding out for these events while ignoring the crucial importance of savings is foolish. Why?
- Savings have the potential to grow on their own over time through interest.
- Saving regularly can become habitual, something that is rational and worthwhile to do as a long-term strategy; a (consciously) automatic action that lets you get on with your other goals in life.
- Savings can be added to over a lifetime, in lesser or greater amounts depending on your circumstances and goals. Sometimes you might be able to save a lot, other times very little.
- Savings give you the ability to cope better with life’s events, to roll with the punches and not get floored every time something breaks down or an emergency strikes.
- Savings buy you time, which affords you the opportunity to invest in yourself and be able to stomach taking greater risks; to act on your ambitions and explore new avenues of earning, whether employment or entrepreneurship, leading to even greater savings and wealth.
- Savings you make can be diverted into a range of assets and instruments which puts the money to good work. In other words your money works for you rather than being sat somewhere in a passive state, gradually being eroded by inflation.
- Irrespective of the amount held, savings are the hallmark of an individual with high self-esteem and self-worth, i.e. pride.
Even the inherited wealth you might acquire outside of your own savings input must have come from somebody else’s savings, made recently or perhaps many generations ago. It’s inescapable, otherwise they’d have nothing to bequeath to you, only their debts. Somebody, somewhere must have grasped this principle and taken the action required save a portion of their earnings. So why not tip your hat to those ‘radicals of wealth’ who came before you, and start your own savings habit today, no matter how modest the amount or how regularly. Take the responsibility for your own savings. It doesn’t matter what your level of earning, the same principle applies. Everyone can save something, I’m certain of it.
It’s a start, a foundation. Over time it will truly mean the difference between wealth or no wealth. What’s your alternative?
How do you view savings within your personal finances? When did you first grasp the principle that savings are the foundation of wealth, and what impact did it have on your wealth?