Recently, i was talking to a friend who has quite a large amount of savings and good income from his various sources such as a website he manages professionally and also from Forex trading. Two years ago when he was at the age of 24, he already has over $300,000 savings and makes a consistent 5-6k income from his website and also 2-3k monthly from Forex trading. No doubt I was envious of him having such good income and this kind of savings at his young age.
When i chatted with him just this week, things don't seem that well for him any more. He told me he lost $200,000++ in his Forex trading due to greed and his website income has dwindled to only 2k per month. Yes, greed can affect a person even when he already has a substantial amount of money in the bank. Be careful if you're doing something for the money. He bought a car before he lost money and now he still drives it with a monthly expenses of about $600. He paid $30,000 cash for the second hand car. Even if he does not drive a car, he will still take taxi every single time as it has already become a habit for him which he has been doing for the past 4-5 years.
This brings me to the point that frugality is important even if you think you have a lot of money. You may have friends who also tell you that they make this amount through stocks trading or this amount through Forex trading and this makes you envious of them. You may even feel that maybe you can follow them and make that kind of money fast through trading. A person who knows how to make money may not know how to manage money. It is not how much money you can make but how much money you manage to keep at the end of the day. When increasing your expenses, do always remember that one day you may not be able to afford the luxuries you are having right now. Will you be able to change your lifestyle when the time comes?
As for my friend, I cannot advise him any further. Two years ago when he told me about his consistent profits through Forex trading, I told him that it is not easy and very hard to control greed which he agrees to it. I did not expect him to lose that much as he seems quite well controlled back then. Still, things can spiral out of control when you least expected it to happen. I trust that he has learnt his lessons and will not make the same mistakes again. As for his spendthrift lifestyle, it seems like he can't change much of it even though he has a lower income now. Eating at restaurants and having a car has already become a habit and part of his life which is hard to change.
Life can be enjoyed even when its simple. But however, don't get the wrong idea that we should save money to the point of stinginess. Spend money when you have to but keep it in check. Spend money on meaningful stuff that will add value to your life and build up relationships. The worst reason you want to spend money on is to impress somebody that don't matter anyway.
"Beware of little expenses; a small leak will sink a great ship"-- Benjamin Franklin
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