I recently wrote about wage gaps vs. effort gaps. In a similar vein, let’s take a look at infamous “wealth gap.”
While it’s true that some people are born into an abundance of wealth, they are certainly a minority. 43.4% of the world’s wealth is controlled by the top 1%. Most millionaires are in their mid-sixties, at the tail end of decades of savings and about to start withdrawing for retirement. The so-called “wealthy” achieved that status after many years of dedication, patience, and rarely an appetite for risk or blind luck.
So often, I hear people complain about their low income and how they are not making enough money. Sure, wages have stagnated while prices have skyrocketed, but that’s beyond your control or mine, and there are still plenty of examples of individuals who rose from having very little to having more than enough.
Those who complain about the “wealth gap” don’t realize the quickest way to increase one’s income is to stop spending money on frivolous nonsense and put that money work instead. They never talk about saving, investing or spending gaps.
Society has trained us to believe that making $200,000 and spending $195,000 is a bigger flex than earning $80,000 and spending $40,000. It’s more impressive to have a sports car in the driveway than $100,000 in your 401k account. It’s better to carry a luxury handbag and live on ramen than shop at the Whole Foods and rotate the same wardrobe for a decade. It’s so important to have an over-the-top wedding that it’s worth starting off your marriage with significant debt. The messages that society sends out are dead wrong.
There is so a heavy focus on how much money people MAKE. There is very little talk about how much money people KEEP. Being good at keeping money is far rarer than being good at making it. And it’s a skill–a skill, unfortunately, that many have not learned, nor taken the time to pick up. Instead they point their finger at whomever is most convenient, whether that be their parents, employer, landlord, or the government.
History has shown us the biggest builder of wealth is time. With consistent good choices over time, each of us is capable of building wealth. Blaming the so-called “wealth gap” is just an excuse not to take responsibility for one’s present habits and future potentiality.
Saving for the future may require moving back in family, sharing a cheap studio apartment with a roommate, eating rice and beans, quitting alcohol, wearing free hand-me-down clothing, working two or more jobs, or driving a 20-year-old car until it dies. I’ve personally done all of the above. It’s by no means glamorous and it’s certainly not fun but, in doing so, I freed up enough cash flow to start saving for the future, starting with just $25 per month and gradually building up to 65% of my net income.
Trade your weekend Netflix binge for some professional training. Buy a used vehicle and put the difference towards retirement. Learn to cook at home, rather than eat out. Increase your 401k contribution 1% per year. Those little things add up quickly. They can bridge the “wealth gap.”
It took me eleven years of hard work and intentional career pivots to achieve a six-figure income. And I still live like broke college student. I could probably afford a big mortgage, a luxury car, or new clothes, but I don’t care about those things. My personal money goal is to front-load my retirement accounts NOW, so that LATER I can choose to stay home with children without falling behind on retirement.
High income plus low expenditure is the ultimate life hack. And it is accessible to anyone, given a vision, work ethic, and persistence. The chasm between “wealthy” and “poor” stems largely from money habits. On one side are the savers; on the other, the over-spenders. A bridge spans the gorge, but we need to make the conscious decision to cross, one rickety step at a time.
If you prioritize building wealth over pursuing your desired lifestyle long enough, your wealth will provide the lifestyle for you.