Learn to be Poor -
by Sean Taylor

As you search on the net you may encounter thousands of financial articles with clearly depicted methods and practices on how to become rich. This article’s purpose is quite the opposite. This article is going to suggest that you become poor and strapped for cash, regardless of your income.

That’s right folks – poor and strapped for cash. At this point every reader probubly thinks I am crazy, however it is the best way to actually build wealth.

The concept here is that you create additional vehicles that eat up your cash. Right now, you have a mortgage, bills, etc. However you have no wealth bulding expenditure. The goal is to create automatic withdrawls from your checking account that mirror additional expenses, but actually feed your portfolio. Even the more liquid assets should be allocated in time delay systems, like an online bank (takes 3 days to get payout).

So what? What does this all do? By draining your easily accessible accounts on a systematic basis, you are effectively reducing your spendable income and making yourself “poor”.

Think of it this way – if you go to the store and have 5 dollars in your pocket, how sensitive are you to buying something that costs $3.49? Now what if you were looking at ths same $3.49 item, but you had $100 in your pocket. You would be much more likely to rationlize the purchase of the $3.49 item if you had $100.00 in your pocket because there is plenty of extra money you can use to purchase something else if you need to. With only $5.00 in your pocket, you must select your purchases carefully to maximize value, because there is little room for error.

A very common saying is “a penny saved is a penny earned”. This saying does not take into account the fact that “all those pennies” can earn returns over time. This concept supports the idea that setting up your finances in a way that promotes cost sensative behaviors while increasing the returns by laddering investments given the individuals risk tolerance to provide additional returns.

There may be more on this at later times depending on the feedback. Let me know what you think.

Concept Keys -

1) Make a montly budget
2) Open high interest or brokerage accounts
3) Consistently funnel money into the accounts, pay monthly, automatically as if they were bills
4) Adjust investments based on risk tolerance and liquidity needs
5) Recreate budget including extra investment contribitions as expenses. Treat these as if they are bills, and scrape by on the leftover income.
6) Adjust savings ratio if needed, repeat process to ensure it isn’t too excessive.

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