> It’s called "living below your means and saving money".
… or living well above your means in the time of asset bubbles left and right?
Let's say you and your buddy both make $125K.
If you bought a small $100K serious-fixer-upper house in order to live below your means in 2019 and your buddy bought a large $600K house at the same time which he could barely afford, then who would have "saved" more by mid-2021 when you both sold at 2X valuation?
At some point "living below your means and saving money" needs to turn into "you need to spend money to make money".
"Saving" does not protect you from inflation and it is of nearly zero value in the case of hyperinflation.
We don’t have to be hypothetical. We know an entry level developer at Unity makes almost $200K
I’ve done investment real estate before - I had three houses (including the one I lived in) with mortgages of over $500K when I was making $75K a year. Guess what happened when 2008 came?
How is that person who didn’t save, got laid off and having a $600K mortgage going to fair?
Fast forward to 2022. I have a house in the burbs of a major metropolitan area that at the time I had it built was less than 2x our household income (2016) and I had savings. Since we were living below our means, when I had a 10% (Covid related) pay cut, it stung, but I shrugged and kept it moving.
Saving money is not a defense against inflation. It’s meant as a safety net so when the stock market crashes and you lose your job it’s just a minor inconvenience instead of a major life event.
… or living well above your means in the time of asset bubbles left and right?
Let's say you and your buddy both make $125K.
If you bought a small $100K serious-fixer-upper house in order to live below your means in 2019 and your buddy bought a large $600K house at the same time which he could barely afford, then who would have "saved" more by mid-2021 when you both sold at 2X valuation?
At some point "living below your means and saving money" needs to turn into "you need to spend money to make money".
"Saving" does not protect you from inflation and it is of nearly zero value in the case of hyperinflation.