If you have ever entered the search term “frugal” into Google, you probably know a thing or two about buying in bulk, avoiding life’s simple pleasures, and generally spending time without spending money. Frugality has its place for those who want to increase their wealth in the long term. But frugality alone will not get you to a place of wealth and security. To do that, you’re going to have to spend some money.
When you spend money with the goal of making a profit down the road, you always run the risk of failing. However, if you never spend money (either allocating it into investments or buying some kind of property or experience) you’ll never have the chance of increased earning potential. Using money this way is inherently risky, but you know the old adage: no risk, no reward.
The first step is figuring out how to put your money to work, rather than hoarding it away like some weird miser. You don’t have to be a financial genius to see good returns on your money. It may be as simple as buying a car. People who don’t have cars, or have a car that is old and unreliable, have limiting income options because it’s difficult to get to work. Even if you need to research title loan in Philadelphia in order to get the money to buy a reliable vehicle for work, the increased earning potential on the other side of that new salary may be worth it.
Similarly, buying a house instead of renting a house can save you money every month. When we rent, we’re paying our landlord’s mortgage, plus extra money that goes to the landlord as profit. When you own the house, you pay only the mortgage and the costs associated with owning a home. It might be hard to save the necessary down payment or to take on the responsibility of home ownership. But the financial benefits are immense once you’ve made the change. Not only do you save money each month, the money you do spend paying back your mortgage is saved in the form of equity.
The same is true for your education. It may cost a high price to go back to school, or you may find yourself saddled with loans. But the payoff, if you choose a good path of study, is a better job with higher earnings on the other side. If you do the math and find yourself able to pay back the loans quickly with a future salary, then spending the money is well worth it.
In the end, people who get rich don’t do it by being frugal. Frugality is a good habit to have, but unless it is paired with higher earnings and investment returns, it won’t turn into a more prosperous or secure life. So start to figure out some ways that you could increase your earning potential. If you combine this extra money with the good frugal habits you already employ, you’ll find that you change your life twice as fast.