In the mid-1960s Getty was the richest man in the world. And famously he had a payphone in his house. It’s not quite as crazy as it seems. Workmen and others were coming in and making enormously expensive long distance calls to Europe on Getty’s dime. So he installed a payphone for their use. The moral of this story is simple “Rich people don’t get rich by spending money”.
Think of it on a percentage basis. One family lives on 80% of their income. Another family lives on 110% of their income. Let’s say family A is making $50,000 a year, but living on $40,000 (80%). How much money do you think they’ll have in 20 years? Quite a pile. Now look at another family that makes $1 million a year, but lives on $1.1 million (110%). Where will they be in 20 years? Bankruptcy almost certainly.
If you live within your means, and it almost doesn’t matter what your means are, you can be rich. And if you don’t? You can be poor. It’s not about being miserly, or having to give up everything. If you make $30,000 or $300,000 a year, spend 85% of it and enjoy the heck out of it. But don’t spend it all. The two most important things that money gives us are security and freedom. The rest is just stuff. So install the equivalent of that payphone in your house. Control your expenses and you’ll find that your financial life is amazingly free of pain.