If you want to get rich, don’t save your money — spend it and spend it well

By debt free & wealth building

My parents weren’t the greatest when it came to money. By the time I was 11, they’ve managed to rack up quite mountain of credit card debt. When I was 12, I managed to convince them to get a debt consolidation from the bank and it took them another decade to pay it all off.

From that experience, of constantly wondering if you’re ever going to have enough for rent, utilities and food, I developed a hoarding saver mentality.

I saved wherever I can — on food, on coffee, on transport, on books and on clothes. I bought second hand if it was cheaper, did my best not to eat out and counted every penny. My saving obsession often resulted in depositing hundreds of dollars in coins, much to the dismay of the bank teller that had to count it all up again if the numbers didn’t match what I had put down.

By the time I finished University, I had at least 20k in cash and the only debt I had was my student loan.

My, big, fat and beautiful $43,713.21 student loan.

It took my parents a decade to pay off their debt, which was considerably smaller than mine. After looking at my statement, I felt dismayed that I had allowed myself to get into so much debt. The worse part of it all, I knew what I was getting myself into but did not comprehend the long term financial implications after the experience of University ended.

If I hadn’t gone to University, I could have had enough for a house deposit. If I hadn’t gone to University, I could have used the money to travel around the world. If I hadn’t gone to University, I might have gone down a different path in my career, perhaps even further since those 4 years would have been spent so much differently.

But it was already done. The money was already borrowed and spent on school fees.

By the time I turned 24 and finally moved out, I thought f*ck it and bought a car with the money saved and spent almost all my savings on living.

To be honest, most of my money went to rent and food. There wasn’t really much left afterwards to do anything with. After some contemplation, I sort of understood how my parents managed to get into debt. It takes a bit of discipline not to overspend – to live within your means. Some days I would dream about winning the lottery and becoming a millionaire.

Then I started to examine that dream. What did becoming a millionaire offer me?

The answer: financial freedom.

I could buy myself a lottery ticket every week and hope for the best. There was no guarantee that it would make me rich. In fact, there’s a high chance that it could make me poorer. Gambling is only a momentary thrill. Great if you get something out of it, not so great when you’re $20 poorer.

I began to look at things differently.

Working my current 9–5 brought in a good income but I am tied to it as a means of survival. Sure, it pays the bills and provides me with a good amount of savings afterwards, but it’s still not financial freedom. My debt is still there and will take at least another 8 years to completely pay off.

Then there’s the house deposit I need in order to get out of the renter’s life. The thought of getting myself another massive debt made me numb.

I don’t like debt and here I am planning to get more of it.

So I began to think, to look and to research — how is it that some people are mega rich, yet many of us live paycheck to paycheck and are barely surviving?

The answer is in how they spend their money.

“You’ve got to spend money to make money”

My former manager once said it to me whilst telling the tale of how he help start up the company. For every dollar spent, he expected a little bit more back in return. It was basically a trade of money for more money.

In any kind of trade or business, a profit is made when you get more back than what you’ve spent.

Another boss had a knack for penny pinching but wasn’t shy to spend it either. But there was a condition: how do you measure it’s return?

Every dollar spent was a form of investment. Sometimes there’s a loss, sometimes there’s a massive profit. Measuring its performance is vital to how the next dollar is spent.

If it works, keep doing what you’re doing to make more money. If it didn’t work, analyse why and either try something else or make it better.

Test. Test. Test. And if you’re going to fail, fail fast.

My first boss has an obsession with testing out ideas. Every other week, there would be a new product or feature released for the business. It was stressful for the team but in the grand scheme of things, it helped pay our wages.

Test. Test. Test. That was his mantra. He didn’t fear failure but saw every failed dollar spent as a learning opportunity. He would invest a little bit at first and if it failed, he dodged a financial bullet because he hadn’t spent that much on it. If it worked, more time, resources and money would be put into the project.

The bigger the project, the bigger the potential loss. So instead of risking everything on one single idea, he would spend his money on little ones first and built upwards if it worked. The quicker he failed, the quicker he can move on and find something else that works.


A foray into entrepreneurship

There is no way I can gain financial freedom with a 9–5 job, not unless I’m getting paid half a million a year or something ridiculous.

In order to be debt free and have true financial freedom, I will need to master the art of making money from money.

Over the past few weeks, I’ve decided to shift my mindset from constantly saving every possible dollar to spending it on things that will help me make more money.

I have ideas to test out and this project I’m working on is probably the most I’ve ever spent on any one thing with an expected monetary return.

I call them projects because that’s what they are — experiments with money to make more money. I look for ideas and see what I can do to monetize it.

While previous projects haven’t gone anywhere or have made small profits, I have learnt from them — the mistakes, the losses and how each decision to do and not to do something impacted on the bottom line.

For all I know, this project I’m working on could be a total flop but it’s not like I’m spending all my paycheck on it.

The thing is, I could spend it on a new pair of pants or eating out but that won’t give me the monetary returns I need. This kind of spending will not make me any richer. Spending money on projects won’t guarantee that I’ll be richer from it either.

Working on a project is like buying the lottery, except you’re not relying on chance for a return. It’s a gamble for profit but a calculated one. While it may be safer to keep all my money in the bank, doing so won’t help me achieve what I want and not at the speed I need.

Spending money on ideas is like planting seeds. Some will grow, others will not. Learning from my previous bosses, banking on a single idea is like planting only one seed and hope that it’s not a dud. So rather than taking my chances, I’m doing what my first boss did — plant as many ideas as possible, give it a little bit of time and water it will some dollars to see if it germinates. If not, move on and spend your dollars on another idea.

At some point, something will take root and flourish.

Last modified: May 28, 2020

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