"I make myself rich by making my wants few."
-Henry David Thoreau
I wake up on my couch and try to adjust my eyes to see what the clock on the VCR says. It's after 8:00. I'm confused. It's dark outside. I don't remember going to bed and certainly not on my couch in my clothes. I start trying to piece together how I ended up here.
Then I realized it's not 8 am the next morning; it's 8 pm.
I stayed up all night the previous night. It's springtime and I have a lot of stuff to do for school. I even had to cut my hours at the bank so I had time for all my classes and the associated work. I went to the library earlier in the day in between classes to do some work. I can't stay awake, though. I make the decision to skip my last class of the day to catch a nap before work.
But, I slept through my shift. I already don't have many hours and now in addition to losing some of those few hours, I put myself at risk of losing my job. I say out loud, "I just can't get ahead!"
After thinking about it for a little bit, I realized I don't even know what getting ahead means. I just knew I couldn't do it.
We often hear about people who just want to get ahead, or conversely, people who can't seem to get ahead. If you don't put much thought into it, you would think it's quite obvious what that statement means.
However, you can't try to get ahead without asking yourself what you are trying to get ahead of. So let's explore what it means to "get ahead," financially-speaking.
What It's Not
Before we talk about what it means to get ahead, we should explore what it's not. Getting ahead does not mean (or should not mean) getting ahead of your neighbors, friends, or colleagues. Unfortunately, it's far too common for people to think this way. It's not our fault, either. We're continually being bombarded with information meant to steal our attention and make us believe we need to have this, travel to this destination, or keep up with the Jones'.
In the past, when we were only exposed to our neighbors, friends, schoolmates, and sometimes the show Lifestyles of the Rich and Famous, there was peer pressure, for sure, but it was limited.
Social media has made it even worse to highlight this kind of behavior. It's too easy for people to share only the best parts of their lives while keeping silent on the rest. To followers, it ignites a sort of envy that we're not able to control. We're wired to want to do more of what they are doing.
So, if getting ahead doesn't mean getting ahead in terms of social status, why are people so focused on "getting ahead"?
What It Is
Here's the secret. Getting ahead simply means getting ahead of yourself. Quite simply, getting ahead of your future spending and needs should be our goal.
Let's look at what that means.
For our purposes here, "resources" refers to our ability to spend money. It includes the money you get from working, including working for yourself or someone else. Investment income includes interest from savings accounts, CDs, and bonds, dividends from stocks, rents from real estate and REITs (real estate investment trusts), and capital gains (when the value of your investments go up). Pensions and Social Security are related. These are guaranteed monthly paychecks that you get, either from the government or from a company you worked for. Included in the category of pension is an annuity, which is basically just a pension that you bought. Finally, I'm including withdrawals of your money, because you can always spend money that you've saved.
For most people, our basic needs and living expenses are covered by our income from working. The problem is we're not going to be able to work forever. Or, we don't want to work forever (most of us want to retire someday). Work income will eventually go away.