Starting Point is Actually Meaningless to be Wealthy

Like many of you, I’ve wondered whether a starting point matters in acquiring wealth. Over the years, I’ve found out that it doesn’t matter as much as we think it does. What does matter are the actions that you take in the present and the future in order to become wealthy.

Don’t let your starting point discourage you from pursuing financial independence. I’m not going to lie to you and give you a rosy picture that everything will be OK in the end. However, if you make the right choices and take the right steps, it’s more than possible, if not probable.

Whether you’re heavily in debt, raised by an abusive family, or got into a life changing accident, it’s still possible. Plenty of people have done it and people will continue to do it in the upcoming years. Where you start off with doesn’t matter. It’s where you’re going and end up at that matters.

Starting at a bad point may increase the number of years that you are working. It may mean that you have to make more sacrifices than somebody else who started ahead of you. It may mean putting in extra hours at work and you may have to put in more effort.

However, you will never be put in a position where it becomes literally and physically impossible for you to get there. You don’t have to have an innate born gift to get there either. It all depends on your choices and your willingness to make sacrifices in order to achieve the dream of financial independence.

Becoming rich at a young age may be out of touch but becoming rich will never be out of touch for you. America is the land of opportunity.

Any Starting Point is Good

The key to making money does not lie on where you are starting at. The key to making money lies in your mindset. If your starting point actually mattered, then there would be zero rags to riches stories.

People who were dealt a bad hand would quit before starting. Thankfully, that is not the world we live in today.

Just look at Gen Y Finance Guy. He self-admits that he should statistically be in prison. His parents were drug addicts and his dad spent 10 years in prison. However, through the choices that he’s made, he’s pulled himself through the bootstraps and exploded his net worth to multi millionaire status.

Whether you’re in debt today or has a low income, it is entirely possible. You don’t have to win the lottery or make the next GameStop call either. All you have to do is spend less than what you make and invest the savings. We underestimate just how long our lifespan is. A year is an insane amount of time.

We are living in the age of knowledge and technology. That there is an infinite amount of information that is available in the world. It is available right at our fingertips. If you cannot afford a phone or a computer, public libraries are right for the taking as well.

A quick google search comes up with a wealth of information for you to browse and understand. The question is are you willing to actually apply the lessons that everyone else is teaching you. That’s what actually matters. Not where you start but who you are as a person.

It is quite surprising how few people are willing to make simple yet hard choices that can change their lives for the better forever. Don’t be one of them.

Billionaires’ Starting Point

When searching for people to emulate, watching what billionaires did at a young age is not a bad way to go. One of the people that inspired me to give life everything I’ve got is Mark Cuban. I’ve read his biography and story and listened to his interviews.

I consumed everything that he talked about and took them to heart. One of my favorite sayings is “well, if he can do it, I can do it too”. Since then, I’ve read tons of millionaires’ and billionaires’ biographies. Keeping track of how I can emulate their successes became a favorite past time of mine.

Some of the stories are motivational enough that they will make you forget where you’re starting at. They will make you look towards the future. It may be hard to get to but it is a road well worth taking once you get there.

When Mark Cuban was 25, he was sleeping on the floor in a 3-bedroom apartment. With 6 other roommates. Hardly the glamorous start that envision for a billionaire. Chances are, you are not as destitute as he was at his age. That means that you are even starting off at a better spot than he was.

You have a chance at having more than he did. How great is that?

My parents did not come from a place of wealth. They are clueless about money as many people are. All my parents did was work hard and saved money. However, when they did invest, it was on speculative bets and they never panned out.

We never struggled but we didn’t live a lavish lifestyle, either. A classic middle class lifestyle. Upward mobility was difficult for us. Yet I still came out pretty well for my age.

Examples of Different People’s Starting Points

Below may highlight some other’s specific starting points that have a path to profitability.

1) Brett, 30 Years Old With $50,000 In Debt

Brett’s starting point is $50,000 in debt. The debt Brett has has an average annual interest rate of 8%. That is $4,000 that goes out the door in interest expense alone. Even then, all hope is not lost. $4,000 may be a lot of money but it’s certainly something that can be tackled.

Below is a sample budget for what a person with $50,000 in debt can do.

A $25,000 in yearly expenses means a budget of approximately $2,000 a month. Completely doable in many parts of the world and in the United States. I live on a $1,800 monthly budget myself. I also overestimated the amount in taxes that Brett would pay.

Even afterwards, Brett can contribute $11,000 a year to tackle the debt. In 4.5 years, the debt will be completely paid off. Then afterwards, the money will be all gravy.

What this means is that Brett will just have to work an extra 4.5 years against someone who is starting off at 0. Also, that is if the person starting at 0 even has a 22% savings rate to begin with. Most people in the United States does not.

Whether you’re in debt or not, it’s possible to achieve financial independence.

2) Brad, Starting over at 40

Maybe Brad had more fun than he intended to during his 20s and 30s. He’s gone out for dinner daily, bought expensive gifts for himself and friends, and didn’t save a dime. After almost 20 years of working, Brad has nothing to show for except smiles and content.

Do not fret. Below are the theoretical savings that could get Brad to the millionaire kingdom in 20 years. This assumes an average 7% yearly return.

Even starting at a late age, it’s possible for Brad to become a millionaire by 60 and retire earlier than the normal age of 65. His starting point may be lower than many others but his ending point will be higher.

We heavily discount and underestimate just how long our lives actually are. Twenty years is more than ample time to reach the financial goals you’re trying to reach. It’s never too late to start. For Brad, it may be too late to become wealthy at a young age like 20’s or 30’s.

But it’s never too late to become wealthy, period.

3) Aaron, 30, With Lower than Average Income

For Aaron, his starting point is at a lower than average income. Yes, he will have to make more sacrifices than someone with a higher than average income. That does not make it impossible.

Aaron could get a roommate to cut his rent expense in half or by a third. Instead of eating out, he could buy groceries and make food at home. He employs the frugality behaviors that is apparent with many others in the financial independence journey.

At the end of the day, he can save $12,000 a year towards his retirement. Actually, if he were to put the $12,000 a year into a 401k, he would have more money leftover. The tax deductible nature of 401k contributions is a beautiful thing.

Even though he didn’t start at the highest of incomes, after saving and investing $12,000 over the next 40 years, it adds up to a huge chunk of change.

$1.7 million, to be exact assuming a 7% average yearly market return. I believe that the market will return a higher amount than that in the next 40 years. However, for conservative purposes, 7% is more than enough.

Shift Your Mindset

The ones who care about their starting point is starting with a defeatist mindset. Instead of thinking they can do it, they’re thinking why should I do it? For them, it’s over before it starts. That’s not the right way to think.

I’m a big fan of the realistic mindset. Not an optimistic one or a pessimistic one, but a realistic one. In this particular case, the optimistic thinking happens to be a realistic case. This isn’t a motivational poster telling you to believe in yourself.

This is evidence based with math, logic, and numbers to highlight that it is possible. The person who can make it all possible is you. Will you choose to order the dessert when you’re out because the waiter asked you to? Or will you realize that you don’t even want dessert and pass?

Many people believe that the system is rigged against them. The truth of the matter is, the system IS rigged against them. I know that the system is rigged against me too. The rate of productivity increase has skyrocketed while the rate of wage increase has grown slowly.

As the number of unions declines, the power of employees decline subsequently. The best way to build wealth and say goodbye to the corporate life is to depend on yourself.

It’s up to you to make intentional choices to better yourself. If you do so, it is more than possible to acquire comfortable wealth.

If you don’t, you may be stuck in the corporate life treadmill for the rest of your life. It’s a bleak picture. The key to avoiding that life is to start today. The best time to plant a tree was 20 years ago, the second best time is today.

What Matters is the Future

Today is the result of choices you made in the past. Maybe you like where you are today, maybe you don’t. If you don’t like where you are today, you have the ultimate power to change the course. What matters is the future and where you are going to.

Everything is malleable. Your life is especially malleable because you control it. What’s amazing is that you are responsible for your successes and failures. Yes, there are unfortunate cases where it is no one’s fault. Such as when you get cancer out of nowhere or when lightening strikes you.

However, even then, people have pulled from their bootstraps and became monumental successes. Dwelling on what has already happened is boring. You already know how everything ends up. Watching a rewind of a movie is never an entertaining time for anybody.

What’s exciting is what follows. The potential for tomorrow to be good or bad. Every day, you’re starting over from scratch. It’s a brand new day full of possibilities and opportunities that you can seize.

I’m happy with my life currently. When I evaluate where I am today, I feel that I am at a good spot. However, I’m still excited and look forward to what more I can do. There are infinite possibilities tomorrow that it will be up to me to make it a good one.

Your starting point is not what matters. What matters is your ending point. You won’t know what your ending point is until you actually reach the ending point.

In order for it to be a positive one, take well-reasoned steps to grow and achieve your dreams. It’s more than possible.

Don’t Worry About Your Starting Point

There are many things that we think matters in personal finance. Things like which checking and savings accounts to get. Which credit card you should get. Which health insurance to pursue. While these factors matter in completely maximally optimizing your finances to 100%, it’s extraneous.

What actually matters is your savings rate and investing. That’s it. Anything else is extra things that is a nice to have but not a need to have. Your starting point is one of the nice to have.

It’s nice to start with zero debt, high income, and at a young age. It catapults you further than someone who didn’t start at that point.

However, all that truly matters is saving and investing. Whether your starting point is behind everyone else’s, it doesn’t matter. Where ever you’re starting with, there’s someone who’s starting at a lower point than you.

There are also people starting at a higher spot, as well. It is what it is. Therefore, all you can do is actually focus on things that truly matters. Once you employ the right decisions towards your money, everything else falls into place. Focus on the long term rather than the short term.

It will be amazing what you can accomplish over the next three to five years. Look at your life today. See how far you’ve already come in your journey.

That was before having the right advice and proper guidance. With the right advice, there’s no telling what can happen in the next three to five years. The journey of a thousand miles starts with a single footstep.

Don’t let your starting point leave a chip on your shoulder and distract you from your course.

Just do it.