Starting from 0.

Atomic essay on starting from nothing, frugality and compounding.

“Saving is a fine thing. Especially when your parents have done it for you.”

-Winston Churchill

The harsh reality of capitalism is that those who have their money work for them are much better off than those who have to trade their time for money. But that’s also the bright side - that the system allows you to accumulate capital over time and start living off the productivity of your capital, rather than the productivity of your time.

If you are reading this, you probably started from nothing - making frugality a discipline which you must learn to practice. For a multi-millionaire, an expensive car is not going to ruin him financially. Not even the gas it consumes or the expensive maintenance it requires ever so often. It is but a small portion of his overall wealth.

But for those starting from 0, burning a significant part of your capital in order to to look good is not the way.

“But why? I am on my way to making more money, which means I can afford this car.”

Yes, but a reasonable rate of return on that money compounded over time could amount to millions. You can afford to buy it, but you will pay for it in multiples.

The rich person already has that capital and is living splendidly off it. You on the other hand need to earn it.

Start with the low hanging fruit - look for intelligent ways to reduce your expenses. Finding ways to reduce your costs automatically increases your end of month bottom line (i.e. your savings). No investment returns required.

Then as that money adds up, start looking for ways to make it compound. Financial empires have been built on frugality and a bit of investment sense. Then let the passing of time do its magic.

FINANCIAL SUCCESS = frugality + intelligent compounding + time