There is common advice that says spending money will eventually result in that money returning to you. While this notion has some merit, it’s also a very dangerous piece of advice.
If you calmly observe your surroundings, you’ll notice that people with low income are often the ones who spend money easily. This is where the logic breaks down.
On the other hand, those who are wealthy lead modest lives. For instance, the wealthier someone is, the more likely they are to use affordable SIM cards rather than expensive carrier plans. Conversely, people with lower incomes tend to stick to major carriers, which are often more costly.
It’s also clear that lower-income people are more likely to purchase branded goods. Influencers on YouTube or social media often flaunt luxury brands, but that’s part of their wardrobe expenses and can be written off as business expenses. Likewise, business owners may drive luxury cars, but those, too, are typically covered as expenses. Accessories, branded clothing, luxury watches, and cars can also be resold at high prices, making them tools for tax savings. This is why imitating influencers or business owners in their spending habits is unwise.
However, the real issue lies deeper than just that.
The Real Reason You Shouldn’t Spend Money Recklessly
Even if you acknowledge that some initial investment is necessary to start a business or make an investment, wealthy individuals think differently.
First, the total amount of money circulating in the world is fixed. Therefore, when someone profits, someone else incurs a loss. Money shifts hands, creating those who currently have wealth and those who don’t.
The problem starts here. If the total amount of money is constant and it circulates equally, then there would be times when you lose money and times when it returns to you. But most people start businesses by taking loans from banks, which adds interest to the fixed amount of circulating money. This interest creates a situation where the economy is driven by money that doesn’t actually exist, forcing someone to bear the brunt of the loss.
This “musical chairs” game is the essence of economic activity. Many people end up worse off after starting a business, whether it’s due to real estate investments in small apartments, falling for investment scams, or overpaying for e-commerce startup materials. Some business models are set up for failure the moment you buy into them. The economy is designed in a way that creates these kinds of traps, so it’s crucial to be cautious.
Some losses are evident due to available information, but others are cleverly hidden. Even well-regarded companies may sell overpriced products by concealing critical information. Complex service and financial product pricing structures often make it hard to determine if you’re being overcharged.
In real estate and used cars, for example, some defects aren’t apparent until after the purchase, leading to expensive repairs. Salespeople often hide these flaws, making these purchases particularly risky. Real estate and cars are difficult to buy without going through intermediaries, adding to their costs.
One particularly extreme case I know of involves selling items that cost only 1 dollar to produce for 1000 dollars. Despite the apparent rip-off, customers gladly pay for them. When you spend money without knowledge, you’re more likely to be the one holding the short straw in this economic game. These overpriced products have no true value, so there’s no way your money will ever come back to you.
Compared to these traps, luxury items like branded goods or cars are relatively better. While they’re expensive, their design and quality justify the price to some extent, and they can be resold. However, spending 1000 dollars on something worth only 1 dollar is a hopeless situation.
Real estate is even trickier, with some properties being sold for double their actual value, adding to the burden of mortgages, maintenance fees, and other costs.
The economy today continues to run by shifting interest burdens onto someone else. For this reason, it’s important to minimize unnecessary costs and start small without taking on debt. There are plenty of ways to start a business with minimal capital today. Only consider taking on debt once your small-scale business shows consistent returns and you feel confident enough to expand. Entrepreneurs do take risks, but reckless risk-taking leads to inevitable ruin. It’s the calculated risks that yield the greatest returns.
In fact, businesses with low societal credibility are often more genuine under certain conditions—namely that they’re legal and don’t harm others. The banking system dominates capitalist society, which is why anything aligned with their interests earns social credibility.
Spend Money Only on What Truly Has Value
When considering wealth, don’t just focus on high-income earners; instead, learn from the behavior of those with substantial assets. The truly wealthy are often extremely frugal, even appearing stingy to ordinary people. Their purchases are typically valuable assets.
They also understand that holding onto cash will lose value over time due to inflation and currency fluctuations. The challenge lies in balancing the risk of losing value through inflation with the risk of spending recklessly.
Wealthy individuals often dress simply, avoid eating out, and rarely engage in nightlife. When they do buy houses or cars, they carefully consider resale value.
Even if someone earns a high income, like 100000 dollars per year, they need to be cautious, as having a high income doesn’t necessarily mean they’re wealthy. People who work hard to boost their income often find themselves targeted when they finally relax and enjoy their earnings.
Earning money is pointless if it’s not used for something truly valuable. Spending money wisely is more difficult than earning it.
For example, 90% of people who try real estate investment fail because the best properties are only offered to wealthy individuals or taken by large companies.
Even though anyone can start investing in forex (FX) easily, it’s incredibly risky. More than 90% of individual Japanese forex traders lose money, even though the odds seem like a 50-50 game. Despite potential profits, a 20% tax is levied on gains, making it hard to come out ahead.
Consider why so many professional traders on social media or YouTube promote their strategies and have sponsors from brokerage firms. Even if they once made money, maintaining consistent returns is extremely difficult. Markets change, and strategies that once worked may no longer be effective.
Stock market also carry risks. Wealthy individuals always hedge their investments by diversifying across assets like bonds, gold, silver, and real estate. Investing everything in the S&P 500 without diversification is dangerous. Always diversify and invest only what you can afford to lose.
The wealthy focus on assets that won’t lose value. They research market prices and make informed decisions. Start by buying items you can resell for a higher price than you paid. In real estate, invest in properties with land in high-demand areas near stations, where population growth is expected.
While the total amount of currency is constant, when stock prices drop, money often flows into stable assets like bonds, gold, and silver. Hedging is crucial, and long-term investing with modest returns is the key to stable wealth.
The wealthy are also stringent about tax-saving strategies, often setting up offshore bases or creating businesses to optimize tax deductions.
By investing carefully and allowing compounding to work over time, they create a system where their assets generate income passively. It’s only at this stage that they start to indulge in luxuries.
Invest in Gratitude, Kindness, and Thoughtfulness, Not Just Money
In contrast, expressing gratitude in human interactions offers the highest return because it requires no initial capital. Moreover, it can spread infinitely without causing someone else to suffer a loss, and it can even return to you in unexpected ways.
The key is to give without expecting anything in return—whether it’s gratitude, kindness, or a smile. This creates a form of investment that doesn’t strain you, even if nothing comes back.
The more gratitude and kindness you circulate in the world, the more these intangible currencies grow and return to you in various forms.
So, rather than focusing solely on money, share intangible values freely and generously. Don’t fall into the traps laid by society or the market.
Conclusion
Social status and credibility often come with hidden, significant costs. Instead of blindly following societal norms, always assess the true value of things and think critically before spending.
The total amount of money remains constant, but the economy keeps running by tacking on interest that shouldn’t exist. As income grows and financial comfort increases, that’s precisely when you’re most at risk.
People with lower incomes spend easily, while the wealthy are frugal. Many goods sold today don’t match their price with value, so spend wisely on things that truly have worth.
However, money isn’t the only currency that matters. Circulating gratitude, kindness, and thoughtfulness is just as important.
コメント