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Manage Your Money Like You Are Rich

“In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well-heeled go into debt buying televisions and cars they don’t really need.

Yuval Noah Harari – ‘Sapiens’

What does it mean to live like you are rich?

In today’s intensely online world, it is hard to know the truth. On social media, particularly Instagram, flaunting riches is everywhere you look. However, are these people really rich? Is that really their Ferrari, their mansion? Did they actually buy those designer clothes or were they given them by the company so they can promote them?

In a way, it does not matter, because what they are doing clearly works for them. These influencers find that the more they flaunt their alleged wealth, the more attention they get. Therefore the more money they can earn from their notoriety.

However, what they provide is actually a parody of wealth. They display activities and behaviours i.e. the purchasing of fast cars, mansions, private jets, expensive holidays etc, that are, of course, things that genuinely rich people do. However, they are not necessarily indicative of how a genuinely rich person manages their money.

Easy come, easy go

We have all heard stories about people who have become incredibly rich in a very short space of time, and then a few years later are declaring bankruptcy – lottery winners, sports or music stars etc.

Could it be, that because the riches came so quickly, the individuals involved had not had a chance to learn exactly how to manage their wealth in a sensible way? Maybe they had their heads turned by the clichés of wealth. Exactly the sorts of things that one can see influencers on Instagram using to get attention for themselves?

The key is, that not only can you never be sure if these people actually are rich, or simply using the clichés of wealth to appear so, but also there is very little point in trying to get rich yourself, unless you can put yourself into a mindset that will allow you to maintain and grow your wealth. Which brings us to the oft quoted:

The Micawber Principle

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.


Wilkins Micawber in Charles Dickens’ David Copperfield

Do genuinely rich people consume in essentially the same way as the allegedly rich influencers described above? Of course they do – otherwise all of these extravagant things would not exist!

However, what separates the genuinely rich from the fleetingly rich like certain unfortunate lottery winners or media stars, and how they will ensure that they STAY rich, is that they know to separate their wealth. Even a private jet can be fine to have – as long as you can afford it, and it does not eat into the money you are using to grow your net worth.

Separate your funds

Therefore – the first step to thinking like a rich person in the 21st century, is to understand just how much spare money you actually have, and then start to separate it from your day to day. What you have to cover your day to day costs, what you assign for your ‘play’ money i.e. what you can afford to blow on all of those little luxuries, and finally and most importantly, what you have free to put away and save, so that it forms the basis of your increasing wealth going forward.

What is the difference between a billionaire who has 10 million to save and invest each month, and a normal person who may only have 50 bucks a month to save, or less? Conceptually nothing at all. The principles are exactly the same. Care for your money and you can watch it grow over the years.

Even if it is a small amount to start with, growing your savings and increasing your wealth can give you just as much of a rush as any purchase of a new gadget or treat. It will then hopefully turn into a habit and lead you down the road of looking at ways you can become more efficient, save more, and grow your savings via investment strategies.

Ask yourself: ‘do I really need it?

What is it you crave? Is it a new car? Expensive clothes? Restaurant meals? Pricey booze? You probably don’t need it. Even if it’s only a daily coffee from Starbucks, there is probably a cheaper alternative. Take that alternative and you can add to your savings and watch them grow, month on month, year on year.

Watch your money like a hawk:

The rich have enough funds to employ money managers, accountants and advisors to help them manage and grow their wealth. However, nowadays you can use technology to track your money, with all of the knowledge in human history available on the internet (including on this site!) There are even dedicated banking services such as Revolut or N26, whose apps are incredibly transparent and easy to use, and include budgeting tools as part of their offer.

Learn how to make your money work for you:

The complex world of investment has now also been blown open wide by a variety of new products Stock trading apps such as Trading 212, Freetrade or Etoro, which allow you to start to experience how stock trading works without the high barriers to entry in regard to cost and complexity that traditional stock trading platforms have.

Whilst we can’t all be rich, the act of thinking like you are, by taking immense care of the funds that you do possess and making them work to grow, will not only increase your chances of eventually becoming rich, but will without doubt, make your life easier and add to your wealth.