You can only save as much as you earn.
Rich people live by one core truth above all, a truth that absolutely should be first in your mind before you even think about making a spreadsheet for budgeting. This truth is: You can only save as much as you earn.
It’s kind of obvious but think about it: you can only save so much before you’re cutting into basics like the roof over your head and nothing but rice and beans for sustenance. Even if you somehow spent zero dollars, got rid of all your expenses somehow, and bought absolutely n-o-t-h-i-n-g, not even essentials, you still couldn’t save more than you get in your paycheck. It’s just not possible, right? There’s no way to sock away 110 percent of what you earn unless your job is up to some seriously shady accounting practices.
You can only save as much as you earn . . . but you can always earn more. Rich people take this to heart. They’re out there asking for raises, trading up to better-paying jobs, buying rental properties, and investing like crazy. And they’re not trying to fix shortfalls with scrimping and cutting back. Why? They know that earning more at their job is step one . . . because money can make more money. Earning more leads to investing, and investing gets you harnessing the power of time to make your money grow, and that is exponentially more impactful than just never going to Starbucks again or living with six roommates until you’re fifty
Essentially, rich people know that you can’t just budget your way out of a spending hole. And you definitely can’t budget your way out of poverty.
Sell your skills.
Think less climbing a career ladder from rung to rung and more scrambling up a climbing wall where the next foothold could be above, below, or to the side of where you are now. For example, if you start your career out in the accounting department of a pharmaceutical company, your second job could be in the accounting department at a tech company. Then your third job could be a junior software engineering role at a tech company. Your next role could be a project management role at a competing tech brand. Then—who knows? Maybe you become COO at that tech company, maybe you quit and found your own pharmatech startup, maybe you’re recruited by the CIA to build spy robots.
Or maybe you start in accounting at that pharma corp and then move into a marketing role there. Then you become a senior communications officer. Then you’re headhunted by a celebrity PR firm. Then you meet some A-lister on a red carpet, fall in love, and become an influencer couple with your own wellness brand.
It might sound over the top, but this is literally how successful careers work: listen to a rich person tell you their career history and many, many of them will have these kinds of zigs and zags or straight-up twist endings. Rich people don’t see their career trajectory as copy-paste, copy-paste. They’re playing a game of word association, strung together with the skills they’ve acquired and the knowledge they bring.
Work your network.
This is the other thing that sets rich people apart from the average person: they’re never, ever satisfied, and they are always looking to trade up.
Seriously, they could be happier than a clam at their current job, ten out of ten, love their boss, love their work, love their team . . . and they are still eager to have a conversation with somebody at another firm, just cuz. They know that opportunities are had when you’re in the right place at the right time, so to get the most opportunities, you want to be in the most places, as often as possible. Networking allows you to be in two rooms at once.
But it’s not just a way to get yourself in the door, either. We know that rich people love them some quid pro quo, some positive karmic payback, some I’ll-scratch-your-back-if-you’ll-scratch-mine. Successful networking means that someone’s not just mentioning your name, but actually vouching for you. Because when they say, “Yeah, she’s good, hire her,” they’re putting their reputation on the line too. That’s what makes it so valuable. A recommendation like that lends you credibility in a way that no piece of paper with your name on it, no CV, no interview will ever be able to do. And by the same token, they’ll expect something from you down the line—because, again, they gave you something with serious value.
Know when someplace sucks for you.
There’s a lot you can pick up about a company just on vibes alone, and if the vibes are off, it can take you from corporate baddie to corporate saddie real quick. Here are some key green flags and red flags to look out for at your job.
GREEN FLAG: The criticism you get is about your work product and your performance. RED FLAG: The criticism you get is about you: your personality, your entity, your self.
GREEN FLAG: You’re given resources to solve a problem when you ask for them. RED FLAG: You’re told to “just figure it out” and left to fend for yourself.
GREEN FLAG: Expectations are clearly outlined. Whether or not they’re ridiculous, at least having a benchmark in writing of what makes a good employee gives you a place to start. RED FLAG: Expectations are ??? What makes a good employee? What’s the standard protocol for XYZ task? How are raises determined? No one knows.
GREEN FLAG: You can look at upper management and think, Yup, I’d love (or be fine with) that person’s lifestyle and career. RED FLAG: You look up the ladder and see that people with the “good jobs” (high paying, fancy titles, whatever) are miserable.
GREEN FLAG: Generally some camaraderie around the team—people are willing to help each other even when it’s not in their job description. RED FLAG: “We’re a family here.” NOPE.
GREEN FLAG: You don’t have to “look busy.” There are clear expectations about your work, but no expectation that you stick around late or keep your status active 24/7 just for optics. RED FLAG: You’re role-playing a worksona five days a week. Whether or not you have work to be doing, the expectation is that you’re in your seat, active on Slack, or somehow “on call.”
I Am in Charge of My Money
What Is a Budget? A budget is just a plan for what you’re going to do with your money. It’s strategizing about how to make the most of the resources you have to get the results you want on the timeline you’re working with.
Budgeting doesn’t mean deprivation. Regardless of how much money you make, every budget should have room for the things that make you happy, whether they’re “essentials” or not. More than that, if your budget makes you miserable, you’re not going to follow it, and then it’s as good as no budget.
Budgeting doesn’t mean not being spontaneous. A budget doesn’t keep you from being spontaneous because a budget doesn’t dictate exactly when you’ll spend that fun money. It just means you’ve planned ahead to have some fun—and spend money doing it—at some point in the future. It’s an outline, not a word-for-word script.
Budgeting is about self-acceptance, not punishment. the first step in budgeting is basically just taking a deep, hard look at yourself and your spending habits. And unsurprisingly, seeing your credit card statement and saying, “Damn, I spent seven hundred dollars on delivery last month?!” is just . . . not a good feeling.
So when you take that deep, hard look, and you feel that not-niceness, that sense of dread, that overwhelming embarrassment about how you’ve been spending your money . . . most people just stick their head in the sand. Instead of changing the habit, most people choose not to acknowledge that the habit is going on at all, with a kind of “Well, if I don’t know, I don’t know!” kind of attitude. If they budget at all, it’s a weird punitive “I’ve got to get back on track and atone for my past sins” kind of overboard approach that’s impossible to stick with. That just triggers more shame at being a “failure” and then lands them right back in “ignorance is bliss” land.
What Rich People Know About Budgeting
Rich people have unusual opportunities they want to take advantage of. Whether it’s the chance to quickly close on a property at auction and make it an income-generating rental or the option to cut a big fat check to their favorite charity before the end of the year, rich people get a lot of opportunities knocking that the rest of us might not. n fact, they tend to find opportunities where the rest of us see obstacles (stock market’s down? Buy, buy, buy so you can profit when it rises later). But all those opportunities require money.
Rich people can be just as cash poor as the rest of us. When rich people say something like “My net worth is ten million dollars,” they don’t mean that they literally have ten million dollars in their checking account right this instant. Budgeting is what makes it possible for them to access their money in a timely way—and not overdraw their cash accounts in their everyday spending. A solid budget is what allows them to plan for when and where they should rebalance their portfolio so that any cash they need will be available for them to spend when they need it.
Rich people want their money to make them more money. Rich people also just don’t like keeping money in their checking accounts They want their money to be working hard. And if it’s just hanging around in a checking account, it’s not working. So instead of just parking their millions in a bank account—aka having no plan—they figure out a setup for those millions that will maximize their returns. They strategize. They divide and conquer. They calculate how much risk they can tolerate, research (or hire people to research) different investment vehicles, and allocate their money accordingly.
Rich people who don’t budget aren’t going to get away with it for long. Even people who make hundreds of thousands of dollars a year can be broke if they don’t use a rich person’s mentality. Why? Two words, friends: lifestyle creep. Lifestyle creep is just a fancy way of saying “spending more money as you earn more money.” As people get more and more money coming in from their job or their investments, they can also—if they’re not planning ahead—have just as much money going out the door.
Budgeting: The YOU Method
In all likelihood, you’re going to have to trial-and-error with all the budget methods, or mix and match, or invent your own system. All good, that is totally normal and part of the process. You also don’t have to do it exactly perfectly every single day—if you miss the mark, take that as useful info and see what you can change up to make things easier for you. Again, budgeting happens over time, and goof-ups are a part of that.
No matter how your personal plan shapes up, remember that a budget only really needs to do two things:
- Leave you feeling good about what you spent your money on. Are your basic needs met? Are you happy with the value your dollars have brought you compared to the effort you put in earning them? Are you getting in some of those nonnegotiables to actually enjoy your life?
- Ensure you have some money left over to save and invest. A good budget isn’t just about not getting yourself in debt and zeroing out at the end of every month. It’s about getting to that rich-person place where your money is what’s making you money. Your ideal budget doesn’t just allow you to save: it gets you maximizing those savings so you put your dollars to work, rich-AF style.