I read a quote by Porter Stansberry this week, “Young people I meet today have a very unfortunate characteristic: they tie their feelings about their self-worth to their spending instead of to their net worth (their saving). They’ve confused trying to live rich instead of moving toward being rich. The most significant variable in getting rich is how much of your income that you save.”
I believe this helps explain why it is so difficult to get someone young to save and invest: all they observe about their peers and heroes is their spending. I never see brokerage statements posted on social media. Expensive trips, yes, rental-property portfolio, no. Spending is visible, tangible, and pleasurable, while saving is boring, invisible, and a deprivation.
I prefer to spend money on income-producing assets. Assets such as: securities with dividends or interest, property paying me rent, or other assets with a business that produces income. While other people are shopping in malls, I’m examining cherry-tree orchards for sale. While others are buying big electronics on payment plans, I’m receiving payment plans from secured real estate notes. While others are looking to buy a recreational RV, I’m evaluating an investment that leases RV’s to dealerships. One side is spending money and becoming poorer while the other side is investing money to become richer. The consumer side is killing their money while the investor side is putting their money to work so they personally don’t have to actively work as hard.
Which camp are you closer to: the spending addict or the asset addict? I’m not saying that any or all spending is poor choice, it is just that in my experience, along with Porter, that spending is far overvalued while saving and investing are underperformed by the vast majority of people.