Credit to getty
Self-made millionaires often give a piece of advice that usually defies common notions of financial solutions – “saving won’t make you rich”. This statement may be confusing at first sight, but when we study it deeply, we get a new thinking and perspective. Here, we expand on the thoughts of this self-made millionaire.
First, it’s important to understand that “wealth won’t come from saving”, this phrase isn’t trying to negate the importance of saving. Rather, it is attempting to create the excitement of looking at a bigger picture, of which savings are only a part, not the whole picture.
When we talk about savings, we naturally make a distinction between fixed and fluctuating income. Through steady income, we meet our present needs and through fluctuating income, we plan for our future needs. The purpose of this division of income is to ensure that we have enough resources to maintain our lifestyle.
If we focus only on savings, we only focus on fixed income and ignore volatile income. This means that instead of improving the present state of our financial situation, we become satisfied with maintaining it.
Self-made millionaires don’t want this because they know that in order to build real wealth, you have to expand your sources of income. You have to start new businesses, invest, and show the courage to take risks. An easy way to understand this is that instead of saving your income, you need to reinvest it.
This way of achieving financial freedom is usually followed by big entrepreneurs and investors. These people build considerable wealth when they put their money to work in innovative and enterprising ways.
However, this does not mean that you should give up saving. The importance of savings has its place and cannot be ignored. Even self-made millionaires recognize that savings matter. But, his claim is that instead of saving, more attention should be given to increasing it.
So, if you want to improve your financial condition, you have to adopt new and innovative ways to increase your income along with saving. You will have to take risks to grow your money through high return investments and you will have to expand your sources of income. This is the mantra that has helped self-made millionaires build their wealth, and can do the same for you.
‘Cash flow is king’
The saying “cash flow is king” is a very common and true implication in the business world. It basically means that the success of a business depends on its cash flow. Proper and stable cash flow is essential for a business. It is important because it is what gives a company the ability to run its daily operations, invest, and create emergency savings in times of crisis.
Ultimately, “saving won’t make you money” – this idea serves only as a guide in the pursuit of financial freedom. It fosters a fresh mindset and approach that matches the mindset of self-made millionaires. Rather than saving, it takes courage and entrepreneurship to maximize and reinvest income. And this is what usually helps a person become a self-made millionaire.