top of page

5 Harsh Money Truths You Need To Know Now

While I hate to say it, there are a lot of harsh truths we have to accept in life. For instance, we have to accept that as we age, we can’t eat whatever we want and stay skinny like when we were young. Alternatively, we have to accept that when we ask a girl to hang out and she says “let me get back to you”, she ain’t getting back to you bro. Now, while frustrating these truths of life can be, none trump the truths that revolve around your money and if you ask me, here are the seven that you need to know immediately!

Truth #1: Financial Success Depends On When You Were Born

The truth is, a lot of your success in life comes from factors that lie outside your control. For instance, if you were born in a first-world country, you are infinitely more likely to be financially stable than someone born in a war-torn third world nation. Alternatively, if you were born to affluent parents then unless you are a total financial delinquent, you should be well positioned to never miss a meal in your life. Now, while these uncontrollable factors are probably pretty obvious to you, one that you’ve likely never spent a lot of time thinking about is when you were born.

I would assume that most of us are happy we were born in the first place but let me tell you that being born in different decades tremendously contributes to the level of financial success you will likely end up achieving. Anomalous situations aside, let’s compare the upbringing of someone born in the 1950’s compared to a millennial like me. For this older group, their life path typically involved growing up, getting a very affordable college education, rolling into a well-paying job with a defined benefit pension and riding the wave of stock market success to retirement. Basically, if you were well-educated during this era and weren’t a total mess with your money then becoming financially successful was a given.

Fast forward to my generation, the fortunate Millennial group, and I mean fortunate only because we are fortunate to be alive, and the fruits from this life path are much bleaker.

Nowadays, we go to college and leave with tens, if not hundreds of thousands of dollars worth of debt, only to find ourselves working jobs that pay us a pittance and leave us with little chance of ever buying a home or retirement before we are in a walker.

Now, this isn’t to say that if you weren’t born 70 years ago that you can’t win financially today but I’m simply saying it’s become much harder to do so using traditional means. Instead, as a member of the newer generations, your best bet is to leverage the power of the tools we have in front of us that our parents and grandparents lacked like the internet, cryptocurrency and the like. These are the great equalizers of our time and while Millennials and those born after us have been dealt a rotten hand, at least we are still in the game!

Truth #2: Most People Don’t Want Financial Success Bad Enough

If I asked 100 different people, I can almost guarantee that all 100 would say that they want to be rich. This is pretty obvious because having abundant financial resources certainly offers you the opportunity to have many more options in life. For instance, with enough money, you can decide to never work again or travel to any country you want on a whim. Sadly, from talking to people and through my own observations, one thing has become abundantly clear to me — people don’t want financial success as much as they say they do.

Now, I am probably going to hurt some feelings here but I’d rather your feelings be hurt now and your bank be full later because like I said, most people say they want to be rich but their actions definitely don’t say the same. For instance, many people tell me that they would love to just be able to make an extra two or three thousand dollars a month and for most people this would without a doubt be life changing. However, when I follow up with them after we chat, the only thing they’ve progressed on is the Netflix series that they’ve been watching.

While I don’t want to be an alarmist, I need you to understand that unless you find yourself on the favorable side of asymmetric bets like investing early in cryptocurrencies or getting in on the ground floor of new businesses, then you are likely as they say in the crypto community “NGMI” or “not going to make it”. This is because, as I said before, prices are rising and sadly that $40,000 salary you have isn’t going to cut it. So what should you do? The first thing you should do is understand the limitations of the current income you earn which we will get into more now.

Truth #3: Your Job Will Never Make You Rich

While it’s been years since this day now, I can still remember how excited I was when I started my career back in 2015. It finally felt like all those years of staying up late studying and nearing pulling out all my hair during exam season was finally paying off. Now, I am not going to lie, when I got my first real paycheck I was over the moon. It was definitely more money than I had ever earned to date, however, while I thought that job would solve all of my financial problems, I was sadly mistaken.

As the years went on, I started to receive disappointing raises that barely moved the needle for me financially. Not to mention, at the same time, my financial responsibilities started to mount. Not only was I working towards saving for a down payment, but was trying to enjoy my life as a young adult in my mid 20s.

Then, after my third time receiving a piddly raise that would barely buy me groceries for a month, I had enough. In that moment, I swore to myself that I would never again rely upon my salary as a means of getting ahead and this was by far and away the most pivotal moment in my financial life.

You see, as an employee, you probably see yourself as a contributing member of the company you work for. However, while you probably see your contribution as the work you do, your company sees you contributing to their total expense line. As such, in an effort to minimize their costs, they naturally have the incentive to pay you as little as possible. Most people never realize this but it’s the harsh truth.

Now, does this mean you should slam down your two week’s notice on your boss’ desk tomorrow? No. But what this should open your eyes to is the fact that if you really want to get ahead in life, you need to incorporate other means of making money into your life. For example, you can work a side hustle, start a business or become a masterful investor. Use the funds you gain from your job and have them work for you so that at least one of you won’t continue to feel the pinch that comes with relying solely on your salary to keep you afloat!

Truth #4: Homeownership Will Soon Be For A Select Few

As a homeowner, I can tell you that it feels great to have your own place. From not having to take orders from a landlord, to simply having peace in a place you can call your own, there are tremendous benefits of being a homeowner. Sadly though, having this privilege is only becoming more scarce by the day.

If you’ve been paying attention to the real estate market at all over the last year then you’ll know that home prices have been skyrocketing in most Western markets. During the pandemic, people truly started to appreciate the value of owning their own home and for those who were renting at the time, they too wanted to enjoy this level of solace. As such, home prices soared and as you know, homes weren’t exactly cheap in the first place. This is all to say that at current price levels, and the prices that will present themselves in the future, owning a home is going to be near impossible for most people.

You should recall that I just talked about the fact that jobs aren’t going to be filling your pockets any time soon and if I’m being honest, a 3–5% raise is going to be the best that most people will get. Now, compare this to many markets where home prices have shot up by 20% or more in the past year and you can start to see where the issue lies. Not to mention, as prices go up, so too do the down payments to buy these homes and when you require 20% on an $800,000 home, it’s going to take most people a lifetime to get there. Now, when I say it will take you a lifetime to save up this downpayment, you may think I’m being hyperbolic. Well, I’m not and let me share with you an example of how the math of saving for a down payment really shakes out.

Let’s say that a couple, starting with absolutely no down payment funds, wants to buy a single family home. The house they want is currently priced at $600,000 and based on recent studies, the average American household saves roughly $6,000 a year. At a 20% required down payment, it would take them 20 years to amass the $120,000 they would need to buy the home. Twenty years seems like a long time to wait to buy a house right? Well, it only gets worse.

Assuming a modest 4% appreciation rate, that house in 20 years would now be priced at over $1.3 million dollars so unless they win the lottery or significantly increase their annual savings then they have no shot at ever buying a home.

As such, if one of your financial goals is to become a homeowner some day, aim to make as much money as you can now to ensure you meet this goal before homeownership becomes even more out of reach!

Truth #5: To Get Rich Quick You Must Be Early and Risk Tolerant

As much as I preach the importance of being patient in your quest for significant wealth, I know full-well that most people simply lack this trait. As such, they are always seeking out new ways to get rich overnight and while I hate to admit it, it is possible to get wealthy in a short amount of time but it requires two things: timeliness and a tolerance for risk. Let me briefly get into why these two elements are essential for quick financial success.

Being early is essential to fast wealth accumulation because being early presents the best opportunities for growth. For instance, getting in early at a startup or a new cryptocurrency before its growth matures is essential. This is why we have the examples of the founders of Facebook and all those Dogecoin millionaires out there that got in before takeoff.

However, to get in early, you must also take on risk. Anyone can invest or sign up to work at a proven, mature company but not many want to assume the risk of something new. As such, their rewards are much more moderate.

Now, there’s nothing wrong with moderate gains and in fact for most people I would recommend the slow and steady path to wealth but again because of people’s lack of patience, it’s at least worth knowing which elements must be in play for you to be driving that Lamborghini you want next week.

bottom of page