We must become saver/investor/producers instead of spender-consumers if we hope to achieve lasting prosperity.
It begins with a mindset shift toward frugality. This may seem like an odd place to start, but please bare with me. Frugality is a foundation for growth that leads to prosperity.
Frugality is defined as, “the quality of being economical with money or food; thriftyness” (Oxford Languages).
Economical means: “(of a person or lifestyle) careful not to waste money or resources” (ibid).
With the high cost of living due to inflation, interest rates, and other factors, it is hard to make ends meet, let alone put money aside for saving and investing. I know. I live it every day the same as everyone.
But, we must not merely accept things they way they are, as though unchangeable. There have always been hard times, and people always find ways to survive. Some even find ways to thrive. I want to help you become one of those people.
To thrive in these hard times, we must break from the spender-consumer mindset and become saver/investor/producers. If you haven’t started this journey yet, here are a few simple steps to start you down the path.
- First, stop wasting money on things that you don’t really need and that don’t add real value to your life. Be more thoughtful about the use of money. The goal is get your money working for you, not against you.
- Begin saving as much as you can to build an Emergency Fund that will keep you from going in debt when the next unexpected expense hits you (car repair, medical bill, etc.).
- Pay-off any consumer debt you may have – credit cards, car loans, etc. Free yourself from debt-slavery. Financial expert Dave Ramsey has good advice on how to tackle this – look him up.
- When you have a growing emergency fund (add to it continually over time) and your consumer debts are gone, then begin to invest the money you once spent on debt and other stupid stuff. Start by taking full advantage of any retirement fund your employer may offer. If they provide any matching funds, contribute at least enough to get the full match (usually between 2% and 6% of your gross pay). This is free money. If you don’t understand this, ask your employer’s Human Resources department or your manager for information.
- After that, you should learn about setting up and contributing to a Roth IRA, taxable brokerage accounts, etc.
Take responsibility for your own financial future and well-being by educating yourself on this essential subject. Read books or listen to podcasts about personal finance and investing. It’s not hard to grasp the basics.
From Consumer to Producer
Business ownership is the #1 way to achieve financial security and independence – in other words, true prosperity. You should consider starting a business of your own.
What knowledge, skill, service, or product can you provide to solve a problem or fill a need for other people? It’s only in serving the needs of others that we add VALUE in the world. And the more VALUE that you can create or provide for others, the more money you will earn.
When you’re starting at the bottom and want to work your way up – to climb out of the pit of poverty and debt – you naturally look for others to help. Whether it’s advice, or training, or employment, or some other kind of help, each has VALUE of its own. You are looking for someone to help solve your immediate need or problem so you can move on to the next level in your journey.
As we learn and grow – picking up knowledge, skills, and experience – we increase in value to the world around us. As we increase in value, our income and opportunities can increase.
At some point in life, our mindset must change to see the necessity of becoming producer-providers of value to others. This means that we must have a skill, product, or service to solve a problem or supply a need for other people. This is the essence of every business and every job that exists. We get paid for the VALUE of the product or service that we provide to others.
- The person washing dishes at a restaurant is being paid to provide that service so the business may continue serving food to customers.
- The server who takes orders and delivers food and drinks to the table is paid to provide that service (value).
- Doctors solve health problems (value).
- Lawyers solve legal problems (value).
- Janitors solve sanitation problems (value).
- Realtors help people (value) buy and sell real estate.
Nothing is Free
Everything is about value – solving problems and providing products or services that meet the wants and needs of others. Those who solve the most problems or provide the best or highest volume of services earn the most money.
Money is merely a medium of exchange. It enables people to exchange one valuable thing (such as washing dishes) for something else of of value (such as food, clothing, and shelter).
Sadly, it seems that this simple and essential concept has largely been forgotten today. It seems that many people want something for nothing. They want income without work, and education, healthcare, and more without cost.
But all of these things are items of value which must be created and obtained by and through exchanges of value.
Labor, raw materials, machinery, skills, and knowledge are all elements of the value equation. Nothing is free. Everything has a cost and must be obtained by an exchange of value.
Even if one were to find gold or diamonds in the earth, it’s value does not accrue to the lucky finder without cost. He or she must first dig it out of the ground with their own labor or hire someone else to do it.
Then they must clean it up and transport it – each activity being an element of the value equation. They must find a qualified expert to examine the material and determine its quality, weight, and – you guessed it – VALUE in the market. This evaluation process is itself a valuable service that the possessor of the precious material must pay for – exchanging value (money) for value (services).
Musicians, painters, and architects all exchange their products and services for money from those who want or need those products or services. If the products and services lack the qualities that people want or need, they won’t buy them. They will look for other providers who have what they want or need. This is how value is determined in the marketplace.
The key to achieving wealth is to provide a product or service that is wanted or needed by others who will pay to obtain it. This is the value exchange.
Those who provide the most products and services to the most people at the least cost become the most wealthy (Jeff Bezos, for example). It’s that simple.
We must understand this.
We must become value creators and providers, rather than consumers only.