Are you counting on winning the lottery as your retirement fund? Why do we live paycheck-to-paycheck when we don’t have to? We earn a dollar; we spend a dollar. Then we start the same process over again. Does that make any sense? If we don’t have enough money at the end of the month — what do most Americans do? They apply for another credit card. After all, you can have as much as you need with only a small payment each month. I believe anyone in America can retire wealthy and never buy a ticket.

Can The Poor Get Rich In America?

The answer to that question depends on your definition of rich. In most polls it’s $75,000 a year. Seems low huh? That’s about $36 an hour. A married couple, each making $15/hr., would make $62,000. A common phrase in America is, “I’m doing the best that I can.” In most cases that’s 100% true.

Most of us are living in the best housing we can afford. We are driving the best car we can afford. We are eating the best food we can afford. We are wearing the best clothes we can afford. In other words we, “take it to the limit.” Why do we take it to the limit? Because, living at or above our means, makes us FEEL good.

Other than San Francisco or New York, $75,000 would give most people a pretty comfortable lifestyle. Studies show that after you have the house, clothes, cars and jewelry, spending extra money on “stuff” doesn’t really make you any happier. Believe it or not it gets pretty old. Most wealthy people revert to growing a nest egg for their grand children’s college funds, or investing in new ventures that improve our quality of life. Many start foundations like Bill and Melinda Gates.

The Perception of Wealth

Rich people sit on the dock fishing. They catch enough to eat for that day, and additional fish to freeze, for those days when fishing is not so good. Poor people sit on the dock waiting for someone to give them a fish and hoping that the same people will give them another fish tomorrow.

The rich typically save or invest between 27-30% of their income. They don’t do that because they’re rich; they’re rich because they do that.

Can a You Save $1,000?

Let’s assume that you make $20,000 a year. That’s not a lot of money. On that salary, can you save $1,000 over the course of a year? Break it down to numbers that are easier to comprehend. Over 52 weeks, you would need to save $19.23 per week. Or, based on a five-day workweek it would come to $3.85 a day. The question then becomes, what lifestyle changes would you have to make to save $20 a week?

When my wife and I did this, we cancelled the daily newspaper saving $13 a month or, .43¢ a day. We also cancelled cable TV saving about $50 a month, or $1.66 per day. Just doing those two things would get you halfway to your goal. Turn off lights you aren’t using, turn the heat down a few degrees. The thing to remember is, you don’t have to live like this forever, but the longer you can do it now, the more it will pay off down the road.

After our day jobs, we both worked for a cleaning service and applied that to savings or retiring debt. I did telemarketing on the weekends for a local company. We stopped buying lunches at restaurants and started taking our lunches from home and eating in parks or the car depending on the weather. We started reading books from the library. We shopped for clothes in thrift stores. We clipped food coupons from the Wednesday newspaper. There is a lot to be said for showering together. We kept a daily log of every cent we spent and reviewed it weekly. We were always looking for anything we could cut without dramatically reducing our standard of living. I wanted my dollars in an account working for me, not walking out the door never to return. I got tired of earning the same dollar over and over again. Now the dollars I kept are making more dollars without any effort from me. The more dollars I can keep the faster they grow.

Some Final Thoughts

Being poor, for most people, is a choice rather than some kind of societal life sentence. Chances are, you are not going to stay at your $20,000 pay scale. As you gain knowledge and experience you will move up the income ladder. If you continue to maintain your frugal lifestyle, you can save even more.

Wouldn’t it be cool, if once a week I knocked on your door, and handed you my paycheck for that week? I did all the work and you reap the reward? That’s how you need to think of money. It’s an employee, working for you, building wealth for the future with zero effort on your part.

I’ve had people tell me that they would rather spend the money now, and enjoy it while they’re young, rather than planning for the future. The only problem with that thinking is, someday the future will show up, and what will you have? Parties you were too drunk to remember, a little profit sharing money, if you’re lucky, and a social security check that’s too small to pay the bills. Not exactly the American dream you hoped for. Now you’re at the mercy of government, jumping through a series of hoops to qualify for supplements and handouts.

But, if you are willing to sacrifice, and live for a short period of time like most people won’t — you can live the rest of your life like most people can’t.

Tell me about your retirement plan.

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