You Have “Enough” Money When You Can Afford 2 Needs

By Darius Foroux

Do you have “enough” money? A study found that the ideal income for a typical American family to have “emotional well-being” is around $60,000 to $75,000 annually.1

In an interview, Warren Buffett said he would be “very happy” with $100,000 a year, despite his billionaire net worth.2 Meanwhile, John Bogle, the pioneer of modern index investing and founder of the Vanguard Index Fund, says “enough” is “one dollar more than you need.” Which I think is also a good definition.   The truth is that “enough” depends on our personal circumstances.

7 Things Rich People Never Do

By Darius Foroux

I’ve adopted the mental model of Charlie Munger when it comes to living a good life. It’s useful to gain insights into the thought process of certain rich people.  Munger was trained as a lawyer, got briefly into real estate development, and built his fortune together with Warren Buffett in Berkshire Hathaway. Munger says:

“My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.”

It’s attractive to talk about all the things rich people do and how you can build wealth. A large part of my work focuses on the right actions we should undertake to get wealthy.

To Build Inevitable Wealth, Simply Avoid Financial Ruin

By Darius Foroux

In 1942, the world was at war. In December of the previous year, the United States entered WWII when Japan attacked Pearl Harbor.  By that time, the US got into a war that started in 1939. While Americans were quick to adjust back at home, by turning factories into manufacturers of weaponry, the war itself didn’t play out well at all.   America was struggling in the Pacific. It was a rough first year with many casualties. Some people started to lose faith.

That was the year an 11-year-old boy made his first stock purchase. He bought six shares of Cities Service, an energy company, for $38 per share. He bought three shares for himself and three shares for his sister, Doris Buffett.  The boy was of course Warren Buffett, the greatest investor of all time.

How Do People Become Wealthy? 2 Case Studies

By Darius Foroux

How do people become wealthy? I was always interested in that question because you can learn from other people’s success.   But I don’t want to look at billionaires and no one else. I’m also interested in how “normal” people build wealth.    You know, people who live in your city. Why? If anyone from your city can get rich, you can too.

Here’s an idea: Find someone in your network who you want to learn from. It doesn’t necessarily have to be a wealthy person. It could be someone who’s loved in your community.  Get close to them and simply observe. Look at what they do and listen to what they say. I’ve done that as well. I wrote about what I learned in an article. It’s really a good way to learn.

Impatience: The Pitfall of Every Ambitious Person

By Darius Foroux

People could talk to me about impatience 24/7 but I would still not act patiently. That’s because I had never seen the power of patience in my own life until a few years ago. At some point, I decided to do one thing for a long time without thinking about the results.  I started to write every day. I published a book and articles. Nothing happened for a while.   But after several months, I saw some success. Then, some more. And over the years, things kept adding up.

If you’re currently working hard without seeing the results you want, remember to stay focused on the path.  Remember that overnight success doesn’t exist. We have to remind ourselves of that whenever we’re impatient. It happens to every ambitious person.

Money Fallacy #1: The Checks Will Not Always Come

By Darius Foroux

In the world of behavioral science and finance, there’s a concept called “overextrapolation” or “extrapolation bias” which refers to the assumption that past returns equal returns.  We also tend to make that same mistake with our income.  A lot of people assume their current income level will move in the same direction. If they are earning more every year, they think they will keep earning more.  And if they are earning less, they anxiously assume that trend will keep going down.

Both are wrong. A person who earns well today can’t assume the checks will keep coming in (think of all the people who enjoyed 5 minutes of fame).  In my latest article, I share how you can avoid this money fallacy.

Wise & Wealthy: Pretending You’re Fine And Managing Emotions To Build Wealth

Wise

Too often, ambitious and hard-working people have an urge to pretend that everything is fine.

The house might be burning down, and they’ll say, “It’s fine!” Your house is on fire! How can it be fine?!

Sometimes, we need to admit things are not fine. In his book, Get Out of Your Own Way, the psychiatrist Mark Goulston writes:

“Admitting to yourself that you are upset or in pain can make you feel exposed. You fear that acknowledging a bad feeling gives it more power. The pain might get worse. You might not be able to tolerate it.”

21 Small Actions That Will Make You Richer

Small Actions to Get Richer

Despite the “success stories” you might see online, the vast majority of wealthy people got to where they are after many years.  But most of us have this idea that getting rich can be easy. “You just need to have the right idea!”    Deep down, we know that it’s not that simple. We also know that consistent action over time can lead to big results. As Warren Buffett said:

“It’s pretty easy to get well-to-do slowly. But it’s not easy to get rich quick.”

Whether you’re training for a marathon or working towards financial independence, your best bet is to aim for consistency. What is consistency when it comes to wealth?

The Art of Money

Turning financial success into a creative pursuit

Jacob Schroeder Mar 15, 2022

What do you consider the act of ‘making money’? Is it an act of accounting and measuring? Or, is it an act of imagining and contemplating? Our finances involve numbers and data, but they’re intractably tied to our personal ideas, experiences, feelings and behaviors – intangible things you can’t formulate in a spreadsheet. Therefore, to manage the human side of money, it’s better to think more like an artist than a scientist. 

It’s a shame many famous artists had financial troubles. 

Johannes Vermeer is said to have left behind 10 young children, a house full of paintings no one wanted and enormous debts, causing his wife to declare bankruptcy. Mozart wracked up massive amounts of debt, too, to feed an extravagant lifestyle. Not to be out done, Oscar Wilde lived far beyond his means, until he eventually fell into poverty and supposedly spent his last bit of money on booze. When he took his own life, Vincent van Gogh was poor and destitute. 

Don’t Turn Your Hobby Into a Side Hustle

Analysis by Erin Lowry | Bloomberg  December 26, 2022 

During a holiday dinner party, the host suggested we each share a significant moment from the year. As one woman shared how her pottery class had allowed her to explore her creative side, another cheekily said, “Oh, you could totally open up an Etsy shop and sell your work.” Before she even finished the sentence, I exclaimed, “No! Don’t monetize your hobby!”