The Highest Returning Investment For Beginners

If you never seem to have enough money and you are always stretching to get to your next paycheck or you always feel like you need to work an extra shift to make ends meet, then you have a leaky bucket.

It doesn’t matter if you make $20,000 a year or if you make $1 million a year. If your financial life has too many holes, then the minute that you stop working, your money quickly leaks away. What are these dreaded financial holes?


Have you ever wondered why so many doctors, professional athletes, and lottery winners end up broke? They did not control their spending. Have you ever wondered how there can be secretaries and police officers who retire with $1 million in savings? They started by controlling their spending. These examples are the reasons why all the best financial planning strategies emphasize cutting expenses as the foundation of financial independence.

The Leaky Bucket

If a gardener had to use a bucket to fetch water from a lake to his garden, what is the first thing that he would do if there was a hole in the bucket? Yes! He would plug the leak! The gardener knows that it would be a waste of his energy to fill the bucket with water that would leak out before he could get back to the garden. It would not matter that there is a lake full of water to fill the bucket. Even if some of the water makes it to the garden, a lot of water that would be so strenuously drawn up would be spilt needlessly. Less water would be available to grow the plants. A leaky bucket would increase the number of trips that needed to be made. It would have kept the gardener from doing other important things such as fertilizing and weeding. A lot more effort would be required to produce a good crop. Many tasks need to be performed during the growing season. When too much time is spent gathering water, then other important tasks will be neglected.

A Distracting Leak

Many of us have big goals, visions of a more ideal life. What goals do you have? Could it be to free yourself from a job, to spend more time with family, to volunteer at a local pet rescue, to give more to charity, to know that you will always have food and shelter? Frivolous expenses distract us from accomplishing our life goals–unless the goal is to have a hundred pairs of designer shoes or the most expensive house on the block. There is nothing wrong with having designer shoes or a McMansion, but if these things come before food and shelter and security then our highest priorities are not being met. All too often, those with money problems only get income from one method–working. Working to support frivolous expenses will also take time away from our goals. There are methods to make money without working as described in An Asset Is A Golden Goose, but it is hard to utilize those methods without initially controlling expenses.

Why We Let Our Buckets Leak

Psychologically, it can be difficult to control expenses. Most people, especially in the US and other first world countries, are constantly being told that spending money equals happiness. This societal pressure causes people to make every possible excuse to justify overspending. The popular phrase, “I work too hard to deprive myself of happiness by being frugal,” sounds reasonable, until one realizes that spending money does not lead to happiness and that the consequence is not having enough money for the truly important goals in life. Unfortunately, this leads many people to spend a lot of money that does not make them happy.

Fix The Leak

Here is the good news: Controlling expenses will make more initial impact on your money problems than any other action. Certainly, there are limits to how much a person can cut expenses, which is why it is important to have income as well. However, when there are expenses that can be trimmed, they represent easy opportunities to improve your finances.

People can work on eliminating needless expenses, even when they are working on other aspects of their financial life. Expense control will not prevent a person from investing, paying off debt, learning, or building a business. In fact, being frugal helps preserve money for investing and helps to run a successful business. Many financially independent people find that controlling expenses formed the foundation to their financial success.

Don’t Be Cheap

At this point, I should point out that I am not advocating for people to be cheap. If there is a necessary purchase, it is smart to buy something with high or at least appropriate quality. The goal is to trim away anything frivolous that does not add value to a person’s life. Food adds value, but too much food is frivolous. Clothes are important, but a fiftieth pair of designer pumps may be frivolous. Housing is important, but a six bedroom house may be frivolous for a family of four. Being cheap means buying something that does not do the job it needs to do or that does not last as long as it should. Cheap purchases, even for necessary items or services, end up costing more than something of better quality. For instance, a cheap $5 umbrella will break or leak during the first rainstorm while a quality $10 umbrella will keep the owner dry through many rainstorms. If the cheap umbrella needed to be replaced five times in a year, it would cost a total of $25. Therefore, the five cheap umbrellas would have cost more in total compared to the one higher-priced but well-built umbrella.

Take Control

Do you want to continue worrying about making it to your next paycheck? Do you enjoy being stressed about having enough money? Do you like working so much that you miss out on important family events?

If you are at the point where you just hate being trapped by money, then your first step is very clear. At the point of maximum despair, take comfort in the fact that your first step will be a simple one. Most of all, you will have complete control over your first step. You do not have to pray for a pay raise. You do not have to beg for a handout. You do not have to hope for a winning lottery ticket. Control your expenses, and you will take a giant leap toward financial security. It is the highest returning investment for those at the beginning of their journey to financial freedom.


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