Truth: your income means fuck all. Story time. 25 years ago, I sat in Private Banking, reviewing a client's finances. The man earned 10,000 Euros net per month and spent 12,000. On what? He couldn't say. Money came in, money went out. Current account in the literal sense of the word. Savings? Investments? Financial goals? Nope. Nada. Huge debts instead. I was an apprentice earning 10% of his salary and I couldn't believe what I was seeing. The senior advisor just shrugged. Pretty common, he said.
I learned a lesson. Dave Ramsey's got a point: it's not what you earn, it's what you are left with at the end of the month. That counts. For saving, investing, building wealth. Earnings alone mean jack shit.
But hold on you say, I hear you screaming. The more you earn, the more you can save! In theory: yes, of course. The housewife with her little budgeting book agrees with you. But the real world doesn’t work like that. Income is potential, nothing more. Money is a tool. A lever you can pull. A craftsman with great skills carves the statue of David. Others cut off their own fingers.
So yes, I stand corrected. Income does matter — under two premises: rules and automatisms. Sit down. Sketch your goals. Make a plan. Execute. Save a portion of your salary the moment it hits your account. Autopilot. No further decision, no willpower needed, no chance to forget. Into your pension. Tax efficient. Equities. Compound the shit. Build your capital stack - month after month. Never spend money you haven't saved up first. No consumer debt. Ever. Cash savings beat inflation. Fix the ratios of your expenses. Fixed percentage for rent, car, holidays.
I know. I can hear the "But..." behind your breath. Lifestyle creep. Keeping up with the Joneses. A different phase of life. What if you want your own home? Wife and kids to look after? Car, overseas trips, nice hotels, legroom on planes, luxury items – sure have them. But the rules still apply. Your lifestyle expands into the growing income balloon but it stays inside its budget sleeve. Simple rules, done. Discipline is what keeps you on track and discipline is what most people don’t have. It's a shame. But success is built brick by brick. Compound with enormous results over time.
Back to story time. After university I earned 2,000 Euros net. I quartered it: 1/4 each - rent, daily expenses, fun, investments. 500 for each. No spreadsheet needed. My pea brain could handle it. I felt like a king. Never before had I had that kind of money. Double my student income, expenses low, wealth stacking up. Optionality growing. Budgeting works — who would have thought? Twenty-five years on, I still think about the man who earned 10x my meagre peasant's crumbles and owned less than nothing. His income meant fuck all. Yours means exactly as much as your discipline. It's not for everyone - is it for you though? Your choice.