Thinking In Terms of a Paycheck Is Part of the Problem

Especially when it comes to living at a time many of us have not experienced in our lifetimes, a period of high inflation where every dollar we earn has less buying power and must be carefully thought out before we spend any of it, there is still something I think that holds us back when it comes to financially getting ahead.

A paycheck.

That may seem like a silly thing to say considering a paycheck is of course, a means to an end. We can't really get anywhere without one. But it is how we think about our paychecks which happens to be the very thing that holds us back.

When it comes to income, it's the one thing most people consider as the source to having more money. If they could just earn a little more, ask the boss for a pay raise or find a better paying job, or find secondary or tertiary incomes like second jobs or side gigs, they'd fare better financially.

But the art of having money is not in simply earning it. The art is building wealth from what we earn. In other words, the more you keep and save the better off you are. 

Building wealth is not really so much about earning more as it is about making every dollar we have go farther, and letting our dollars endure the labors rather than us to produce more income. That means taking on some level of risk such as investing.

There is a difference between earning money and creating money. And once the mindset changes to understand that it makes a world of difference. It changes one's entire perspective about money and wealth building and creation.

When you work for a paycheck what you are really doing is simply chasing your tail. You earn some money, you spend it, and then you have to go out and earn some more. But you never really get anywhere. The cycle just repeats over and over again.

Richard Kiyosaki from Rich Dad, Poor Dad called it akin to being on a treadmill, being constantly in motion, but ending up exactly where you started.

The key is to find ways to make what you earn more valuable over time. What's a dollar worth if you spend it? Zero. But if you invest it a dollar could be worth $1.08. And with compounding, over a longer period of time that dollar could be worth $5.

This doesn't mean don't seek a higher paying job and earn more if you can. It doesn't mean don't ask for that pay raise. It doesn't even mean stop working. It simply means, don't think of that extra earned income as something to spend more with. Think of it in terms of something to build wealth from.

If you can get a pay raise through a better job or from your current one, pretend like you never got it and put the money to work for you.

A paycheck can be both a crutch and an opportunity. It just depends on how you think about it. It can either provide a level of comfort knowing if you just keep working, the paychecks will continue to come. Or it can offer you an incentive to put more of your money to work so that your paychecks become less and less necessary over time as an absolute means to pay for things.

As I have always said, paychecks are essentially worthless if all they do is maintain the status quo.

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