Giving Up A Latte Won’t Get You There…
There are two kinds of financial advice in the world: good and stupid.
Now, there are many different schools of thought on what constitutes good.
There’s the Dave Ramsey school – set a budget, use cash in an envelope, cut out luxuries, eliminate debt, and do what you can with what you earn – nothing more, nothing less. Some people think this is great advice because it will help you stay within your means…
But the truth is that method will never make you wealthy…
There’s also the David Bach approach. David says the first thing you should do with a paycheck is to save a big chunk, and then with the rest of your funds, you need to be aware of the “Latte Factor” and avoid paying too much for convenient consumer goods and services.
Again, this is true – to an extent – and while you might be able to retire comfortably, you won’t have a very good time getting to that point…
And most of that advice is okay – but it’s not good in all situations.
If you’ve read any recent articles on personal finance, you’ve probably seen tons of advice just like this – most of it directed towards Millennials.
“They should give up brunch and avocado toast – then they could afford a house!”
“They should get more advanced degrees – then they’ll be more valuable to the marketplace!”
“They should be patient / bootstrap / dig deeper! After all, that’s what we did, and look how well it worked for us!”
Some of that is solid information. Obviously, people who are struggling financially shouldn’t overspend on pricey meals, but let’s be honest…
It’s not brunch or lattes that are the problem…
And to focus on the pennies while ignoring the dollars is stupid.
In some situations, no matter how frugal you are, it really doesn’t matter. There are some life choices that make it almost impossible for you to get ahead with just a paycheck – no matter how many lattes you cut out.
Truth Is One Size Fits All Approach Doesn’t Work
And the old chestnuts of financial advice can actually hurt people.
Back in the day, the smart thing to do was to go to college, get a degree – and the more of those fancy letters were behind your name, the better – and then get a job.
Once you had that job, you could work until you could afford to buy a house, at which point most people considered themselves “set for life”.
But that’s not the case anymore.
These days, according to the Wall Street Journal, college tuition has increased 1375% since 1978, student loan debt has quadrupled since 2005, rent has climbed 20% faster than the overall inflation rate from 1990 to 2016, and, when adjusted for inflation, wages have all but stagnated..
So is going to school and getting a job the best way to live in 2019 and beyond?
It’s true that this advice works for some people, but for millions of others, it’s just plain bad advice.
So what’s a young person to do these days?
Should someone who’s starting out get a degree, find a job, scrimp and save, and then try to eke their way to the top with incremental gains?
Robert Kiyosaki doesn’t think so.
In fact, he thinks that advice is outdated or incorrect for anyone who wants to build wealth – young or old.
I’m sure you’ve heard of Robert. He’s the author of Rich Dad, Poor Dad, the #1 personal finance book of all time. He’s made millions by investing intelligently in real estate and other arenas.
He’s also an advocate for entrepreneurship and taking control of your financial situation instead of being a victim of the system.
Not too long ago, Robert was a guest on London Real.
We talked at length about the pressures facing the poor and middle classes, and how conventional education does not prepare people for financial success.
On the contrary, it prepares them for a life as a paycheck collector and nothing more.
Now, that’s not to say you or the people in your life should throw away basic financial wisdom without a second’s thought. Some things like “don’t spend more than you make” and “save for your future – and save for a rainy day” are true no matter what your station in life is.
In Some Situations, That’s The Best People Can Hope For
But if you’re in the stage of life where you’re ready for more than a 9 to 5 and the kind of lifestyle a paycheck can afford you?
It’s time to think outside the box and beyond the nine to five.
It’s time to think like Kiyosaki and see how you can make your money work for you – instead of the other way around.
Instead of cutting out lattes and hoping for the best, Robert recommends a path of entrepreneurship, self reliance, and smart investing.
For some, that might involve investing in cutting edge technology like Bitcoin. For others, that might involve investing in the tried and true world of real estate. And for others, that could include any one of a number of lucrative investments – none of which call for you to cut out the little niceties of life and all of which will pay you for more than just your time.
Whatever you choose to invest in, if you can do your due diligence and make sure you’re investing in something that will pay back your initial investments and then some, you’ll truly have the best of both worlds – a life you can enjoy living now, and a promising source of income for the future.
That’s advice you can take all the way to the bank.
Editor, Brian Rose Uncensored