We are coming out of an era of massive frugality. Frugality has its merits, of course. But it’s not the way of prosperity. It’s possible that global events will conspire to make financial independence even more difficult to achieve, but right now there are more opportunities for people to get ahead than there have been in quite some time. It’s important not to forget the lessons of frugality, but it’s also important to understand that frugality alone will not get a person to any kind of real wealth. There has to be input, not just a lack of output.
Frugality is all about reducing. Eat out less. Cut the cost of the ingredients you use to make food at home. Make your clothes last longer. Go out less. Read books instead of subscribing to Netflix. The list goes on and on. There are merits to this sort of lifestyle, but frugality alone tends to be not very fun. Because it’s hard to enjoy the frugal lifestyle without other things going for yourself, it’s important for people to think about the ways that spending can be used to increase your lifestyle and earning potential.
This is the core of investing, especially investing in yourself. Henry Ford famously didn’t start saving into well into his thirties. Until then, he was spending his earned wealth as well as quick personal loans to increase his education, business acumen, and social network. At the end of his higher education journey, he had a unique perspective and was one of the world’s most educated people. With his plan for massive industrial change, he was able to alter the course of human events and accumulate great wealth in the process.
You’re not the next Henry Ford, and neither am I. But the lesson still works the same way. Frugality as an all-consuming ethos won’t allow you to cobble together the perspective and knowledge of someone like Ford. Learning requires risk. Knowledge is power, the old saying goes. According to Karl Marx’s labor theory of value, money is a representative form of human labor power. Though not everybody agrees with this equivalency, it’s enough to understand that knowledge, money, and human labor are all powerful things with great value of their own. If you lack money, for instance, work on increasing your knowledge or the work you do, and you may find that the money thing works out on its own.
We’ll add one other element to the ones about. Time. Time is money, another old saying goes. If Time = Money, Money = Labor Power, and Power = Knowledge, having a wealth of one makes getting the other much easier. As a young person, you might have lots of time. By exchanging some of this time for knowledge, or putting it into an effort of labor, you can get more money. Don’t forget to invest in yourself in these ways. It’s a way of taking your own native resources and using them to build a better life, for yourself and others. Don’t leave yourself unimproved.