Do you know the secret to make money? What is the key to making a profit? Saving money. Before you disregard this as obvious, I implore you to read further and then decide.
In December 2018, I met a long-time friend, guide and mentor. It was the most memorable experience I have had in recent years. It’s been a while, but the memory is still fresh. I am writing this piece now because I am only beginning to understand one of the things he said to me that day.
We were sitting in his conference room—just the two of us, swapping life updates after seven years. I had gone from school student to engineering graduate to a job-seeking digital marketer. He had gone from being my tuition teacher to becoming a major player in the startup arena. The one thing that hadn’t changed was his clarity and my amazement.
I asked him about how he turned his life around money-wise. In return, he asked me a question.
“How did you come to my office today?”
“Uber.”
“How much did it cost?”
“Rs. 150”
“How much did you earn today?”
“Not a single penny.”
What he said next completely blew my mind, not only because it was profound and simple but also because he made it so obvious. He said,
“I have lived by a rule since I was eleven. I keep a track of how much money I spend each day. I ensure that the money I spend is always less than what I earned that day. This way, I am making a profit every single day. I live by this principle even today. Doing this over so many years ensures that my wealth continues to grow regardless of anything. What has changed over the years is the amount of money I am spending and earning daily, that’s all.”
Don’t get too wrapped up in words and appreciate the thought behind the argument. I was taken aback by its simplicity and its brilliance. Even if you don’t believe it’s possible to make profits daily, especially when you make a big purchase, it is still fascinating. On top of everything, such a thought occurring to an eleven-year-old out of sheer necessity shows why he was destined for success today.
Whether or not you share my fascination at this moment, I would like you to consider what it would take on your part to ensure you are making a profit today. If there’s one thing I would like you to take away from this, I would like you to ask yourself if you are making a profit today. In all honesty, my answer is NO!
Over the last year, I have been living the student life again, pursuing an MBA. I understand the value and importance of money more than I have ever done before. Many of my fellow students are very creative about saving money and there is much to learn from them. We are in a situation where we have given up our sources of income to come and study. Over the last few months, I have spent a lot of money living in France and with every passing day, I understand the meaning of “Every penny counts” and “A penny saved is a penny earned.”
My experience has made me realize the power of small changes combined. Even if you earn a penny more than you spend every day, over the long run, it all adds up to something big; I am reminded of an episode of the American Sitcom Brooklyn Nine-Nine when Jake has to buy his apartment to prevent his eviction but does not have any money. To his surprise, he learns that his childhood friend Gina has been saving up all these years and has enough money to buy the apartment.
No, I’m thrifty. I cut my own hair. I walk to work. I eat Scully’s lunch every day. I’ve rented the same crap box since I was 20 ’cause it’s so cheap. I’ve saved up money, and I’m looking for a real estate opportunity. – Gina Linetti, B99, Season 1, Episode 18, The Apartment
In the long term, ensuring you make a profit daily can muster significant savings and be the key to financial freedom. Further, this practice’s mindset applies to the business world when evaluating opportunities and deciding where you want to spend your time.