It Takes Money to Make Money
Author: Patrick Blair
I haven’t written a blog article in a long while, because I got extremely busy with my law practice. There’s been so much to write about: National Debt, tariffs, inflation, weakness in commercial real estate, home unaffordability, banking institution instability, sharply rising consumer debt and bankruptcies, or rising unemployment, but I first want to address something much more fundamental.
Before analyzing investing ideas or macro trends, we have to figure out how to spend less than we make. That’s the real challenge. It takes money to make money! Or said in another way, you can’t invest money you don’t save.
But Can’t You Invest with Borrowed Money (or with Leverage)?
Okay, you could invest borrowed money, but that’s dangerous and ill-advised. You could also trade leveraged ETFs, trade on margin, or use options. So, maybe I should qualify my statement by saying: you shouldn’t invest what you didn’t first save. Loans and leveraged investments (including your home loan) need to be well-managed with proper leverage ratios based on your specific, risk tolerances.
It Takes Money to Make Money
There’s recently been tremendous nominal wealth gained in the stock market, cryptocurrencies, and gold. If you didn’t have investment capital and weren’t “in”, you missed out on all the gains. Let’s face it: you need wealth to build wealth! If you aren’t convinced, look at these Scriptures:
Proverbs 13:11 says, “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”
Proverbs 21:5 says, “The plans of the diligent lead to profit as surely as haste leads to poverty.”
Ecclesiastes 11:1-6 says, “Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”
Matthew 25:29 (for the principle) says, “For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them.”
I’m not trying to glorify wealth accumulation or give it importance beyond what God gives it. That being said, we should be hard-working, good stewards, generous, and striving to provide for our own needs. It’s never too early or too late to start! There will always be more opportunities (and disasters). Here are some ideas depending on your financial situation.
· If you have high interest debt: aggressively cut your expenses, work extra hard, and focus like a laser beam to pay it off.
· Trim all unnecessary expenses in your life. Make a list and start cutting them. You’ll feel lighter and freer as you go along.
· Consider cutting certain “sacred cow” expenses for the sake of your long-term financial future: expensive/numerous vacations, new cars, luxury cars, costly gift-giving, and other luxuries. Hold out, so you can feel good about the more meaningful expenditures opportunities that come around from time to time.
· Work overtime, start a side hustle, get a better paying job, and/or move for increased compensation at work.
· Save a percentage automatically into a Roth IRA or Roth 401k. Simultaneously, save a percentage into physical precious metals. Consider putting a smaller percentage into Bitcoin for the long term.
· As you solidify and start growing your finances, grow in your generosity.
Is your lifestyle structured for financial growth? If not, why not? Talk to someone you look up to in this area to get advice and inspiration (maybe even call it a mentorship). Group up with peers to help each other in this and other areas of your life.