How I became wealthy in my early 20’s

I’m no billionaire or even a millionaire but I’m very wealthy and yet only 25. I didn’t get wealthy with a super hot IPO or coming up with a brilliant idea. I became wealthy by changing my spending habits in relation to my income.

People don’t actually want money. They want the things that it can buy. Most importantly, they want freedom. Sadly, making more money rarely buys this freedom. There’s almost always a direct correlation to income and expenditures.

If you were to make $40,000 a year and drive a late model Honda, you would be reasonably comfortable. If I doubled your salary to $80,000, you may upgrade that Honda to a Volvo. Similarly, other aspects of your day to day may change. You might start buying premium brands instead of the generic stuff. Maybe you’ll stop clipping so many coupons. Whatever the case, you’ll probably end up living paycheck to paycheck even with the doubled salary.

I know how easy it is to fall into this trap as I’ve done the same thing myself before having an epiphany and downgrading my lifestyle. My vehicle is not bad. It’s a 2004 Jeep Grand Cherokee with 60K miles. What I like best is that it’s paid for in full. My credit score is excellent and I can afford the payment of a much nicer car but then I’d just be enslaving myself to a payment every month and higher insurance costs.

Wealth: having an abundant supply of money or possessions of value.

I don’t have an abundant supply of money but I have one possession with immeasurable value and that’s time. Because I’m living below my means, I’m able to work in a position that provides me ample spare time. If I were to increase my spending, I’d need to take a higher paying and more time consuming position. I’d have better objects but they have little value when compared to time.

In my spare time I read, develop software, I’ve started two companies, write for three different blogs, and I’ve made time to travel to different parts of the world. I wouldn’t have the time or energy for most of these things if I were working hard 40+ hours every week.

The best part of a downgraded life is the stress relief. Without having any debt or credit card balances, I feel very relaxed. Losing my income tomorrow would not be ideal but I’d be able recover quickly and debt would not pile up while I searched for a new source of revenue.