Millionaire Librarian

Spend less than you make and invest the remainder. Simple but hard. It sounds easy but its not. It takes getting a lot of things right to get this one thing right.

You need to understand the power of investing. Without a good reason to artificially limit your lifestyle then you won’t. Without study and a lot of reflection on money and investing you will not see the need. Without tinkering with an investment calculator and seeing the power of investing then lifestyle inflation will eat any remainder until you get used to that.

You will need a philosophy of frugality, You need some philosophy and a mindset to not get wrapped up in consumerism. You need the knowledge that your freedom and financial independence is what you are purchasing by not purchasing other stuff. You need to be able to see others who make less than you living seemingly better than you. You will need to derive happiness from non-material things. This all takes philosophy.

It helps to have a strong locus of control and flexibiity. You have to be able to steer your life. If something is terrible then you have to make changes to change it. Move if you need to move. Change employers if you need to change employers. Get more education if you need it. Embrace change. If you act like a victim then the world will take advantage of your refusal to change.

You need to figure out these things early. If you wait too long, then you will miss the oppurtunity. Investing doubles money. Saving a little early beats saving a lot more later. Every 7.2 years your money will double if making the market return of 10%. This means you would have to invest twice as much 7 years later to get as far today.

A less important concept to understand than the above is understanding how to optimize your tax efficiency. The simplest way to optimize is to use retirement vehicles. One of the simplest and best is the Roth IRA. Exercise the muscle of investing. You don’t need to know everything about investing or a Roth IRA to do it. Make sure you are below the income requirements and you contribute less than the max. Once the money is in the Roth IRA then invest it in something simple like the S&P 500 or a total market fund. At the beginning always take advantage of tax benefited retirement accounts like your 401k or Roth IRA. Work the muscle until it strengthens and you begin enjoying making money with your money.