Saving Money Will Make You Poor!

The Game of Money: Playing Defense and Offense

In the game of life, money plays a pivotal role. It is a resource that not only fulfills our basic needs but also allows us to pursue our dreams and aspirations.

Doing what we want, how we want, when we want, and with whom we want!

However, the way we handle our money can significantly impact our financial health and wealth accumulation. This article explores the analogy of managing money to playing a game, where saving money is likened to playing defense, and making more money is akin to playing offense.

Playing Defense: The Art of Saving

Just as a strong defense is crucial in any game, saving money is an essential aspect of financial management. It acts as a safety net, protecting us from unexpected financial hardships such as job loss, medical emergencies, or unforeseen expenses. By regularly setting aside a portion of our income, we build a financial buffer that can keep us afloat during tough times.

Jesper, an acquaintance of mine who is a hardworking individual. However, he lived paycheck to paycheck. He often said things like “YOLO”(You only live once), so he indulged in all the fun things and never saved up for anything. One day, he faced a medical emergency that required a significant amount of money. Unfortunately, John had not been saving, and the sudden expense threw him into a whirlwind of debt and stress. Fortunately the medical emergency was with his dog. Still tragic, but his story serves as a harsh reminder of the importance of playing defense in the game of money. Had he been saving during normal times, he would still have his dog. Instead he can now barely afford to eat hot dogs. His dog only lived once. 😟 

Playing Offense: The Pursuit of Wealth

While playing defense by saving money is vital, it is not enough to truly get rich. To build substantial wealth, one must also play offense, which involves finding ways to increase income. This could mean advancing in one’s career, starting a side business, or investing in profitable ventures.

Stan, a construction worker who’s a family friend of mine had a steady income. But he wanted to really secure his financial future so he decided try to increase his income. He took a course on home inspections. It didn’t increase his income immediately, but over-time it replaced his construction job and earned even more eventually. Now he’s able to be his own boss, and even hire some helpers to do the tasks he doesn’t feel like taking part in. Nice one Stan! But can he retire with this?

Investing: The Power Play

Investing is a powerful strategy that combines both defense and offense. It involves putting your money into assets that have the potential to increase in value over time, such as stocks, real estate, or a business. While there is a level of risk involved, investing for the long term can lead to substantial wealth accumulation in the form of passive income.

Let’s talk about Stan again. After his business became stable and his savings started growing steadily, he wondered if he would want to keep doing home inspections into his old age. He read a few finance and investment books and decided on a safe and time-proven strategy of dollar-cost-averaging into the stock market. Here’s what happened.

He put in $650 in each month, starting in mid 2007. After a year, the market crashed due to the US housing market bubble. But he kept investing each month as the books have taught him, that market crashes are a normal part of the economic cycle.

As of today Stan has gone through 3 huge market crashes. The Great Financial Crisis in 2008 we mentioned above, 2020 Covid Crash, and the 2022 Bubble. His strategy didn’t change and now his investments are worth well over a few hundred thousand dollars! Congrats Stan!

Conclusion

In conclusion, winning the game of money requires a balanced approach of playing both defense and offense.

Saving money provides a solid defense, ensuring financial stability and independence. You can’t go on to the next steps unless you have self control over your spending.

On the other hand, increasing income and investing wisely serve as powerful offensive strategies, leading to wealth accumulation.

By working on both aspects, you will get to: Doing what YOU want, how YOU want, when YOU want, and with whom YOU want!