I was chatting with a friend today and asked him how he built his wealth at such a young age. He shared that he wasn't focused on living large initially; instead, he prioritized creating generational wealth for himself and his family. I found this very inspiring and continued to ask him questions about how he achieved this. As a typical Nigerian, he was hesitant to share too many details, but after some persuasion, he revealed a few insights to me.
He shared that during his university years, he earned a significant amount of money from betting. Faced with the choice of either buying a house, purchasing a car, starting a family, or launching a business to generate more income, he opted not to buy a house or a car. Instead, he decided to start a business. As a result, over five years, he managed to earn ten times the initial amount he had. This situation has made me reflect all day on whether it makes sense for a young person to make a big purchase early in life, or if it is wiser to focus on building wealth. I asked a friend of mine for his opinion, and his perspective was quite different from mine. I think I understand why.
The big purchase
Buying a house and a car are typically the biggest purchases we make in our lifetime. If you're a young person with enough money to afford these two items, you may be considered fortunate. However, as a young individual, you have a lot of time on your side. I believe that rushing into these significant purchases might limit your future opportunities. It’s important to take into account your financial situation. If you have enough money that buying a house and a car wouldn’t significantly impact your finances, then it may make sense to proceed. However, purchasing a house and a car early in life without a stable source of income poses a considerable risk.
If you don’t have any source of income and spend the majority of your money on the largest purchase of your life, you may find yourself in a difficult situation once that money runs out. When your funds are depleted, you might end up needing to sell everything you bought. Furthermore, making several purchases and only investing a small portion of your remaining money may not be the best strategy. It’s likely that you would have made more money by investing all your money rather than just a small part of it. My friend made the right decision because he had time on his side.
Time and emotions
I don’t oppose buying a house or a car, but if you are young and have time on your side, there’s nothing wrong with investing your money in things that can make you more money. If you use your money wisely, you might be able to retire early, while others continue to work for the rest of their lives. You could potentially retire in your early 40s and enjoy the rest of your life because you made the simple decision to invest early. However, many people don’t take this path because of their emotions and the way they have conditioned their minds about money before it came into their lives.
Emotion can be the biggest enemy when it comes to money. One of the problems with handling money is that when we have it, we often fail to consider what is truly beneficial for us. This is especially true for young people who are inclined to make decisions based on feelings rather than logical analysis or numerical facts. Instead of focusing on the potential outcomes and opportunities for their money, they may let emotions drive their decision-making.
thank for your time.
