After reading my 2016 review, you said you wanted more detail on how a “rich person” spends money (am I really “rich”? — interesting question). Well, I’m going to give you tons of money porn in a minute.
But first, I want to check in on my net worth goal, which has less to do with cash flow (i.e. monthly income minus expenses) and more to do with the big picture of smart money management. Here’s what I mean by that.
To me, the primary goal of money management is to grow net worth. (Note, I did not say this is the primary goal of life!) Net worth is assets minus liabilities, what you own minus what you owe, and a proper measure of wealth. Income and expenses are important, but mostly in the context of net worth.
Net worth is like a garden. Income streams are sun and water, and investments are plants. You need income to energize the plants at first, but as they mature they can keep growing on their own. If they’re very healthy, they’ll multiply and you’ll have fruit for years, maybe even fruit for your grandkids — if you teach them how to tend the garden.
Spending money is like eating the fruit — it’s not bad, eating good fruit is healthy. Just don’t eat too much. In a big garden overeating can make you fat and sick. In a small garden, eating your only plant means you need to start over every season so you don’t starve. Stressful. Eating should be a pleasure, not a curse. Debt is a weed that can overtake the whole garden if we’re not careful.
My goal is to have a million dollar garden at age 45. Here are my plants and how they grew in January compared to December:
My plants are 401k accounts, IRAs, a business investment (LLC) with various holdings, and an investment in Prosper (P2P lending) that I’m trimming. I have a few debt weeds, but they aren’t growing (0% interest) and they’ll be completely gone by the fall.
Ok then, on to a detailed look at my monthly income and expenses. What follows is the money porn you’ve been waiting to see!
Continue reading “Monthly Money Check: How Rich Spent His Greenbacks in January 2017”