Posts Tagged ‘reserve’

Trying to look a part is perhaps the single easiest way to never become the part.  This is especially true when it comes to money.  It takes a lot of money to keep up appearances.  This money spent on consumption items will be money not used to create real wealth.  If you really want to be rich, create a private reserve first, then let the money your money makes do the purchasing.  Spending first will leave you with empty pockets.

A proper private reserve provides you with quick access to your money.  Another term is “liquid”.  This is why I call it a pool of money.  You can go to the pool and take water out with a bucket.  In the same way, this private reserve allows you access to money when you need it.

A resource you have built and control is worth more than a resource someone else maintains and loans to you.  This seems obvious and logical.  But, it is much easier to simply rely on someone else who has already built it than to grow it yourself.  Consider long term costs when considering how you develop your money reserve.

One key feature of the private reserve strategy is that one builds a pool of funds from which to finance many purchases in life.  The benefit is the interest paid returns to one’s own pool instead an alternate finance company.

Saving… is deferred consumption.” -Gregory Bresiger

“Saving, ultimately, is consumption.  By setting aside some resources for meeting financial consumption needs, we invest them.” –Detlev S. Schlichter

The private reserve strategy initially provides a build up in savings, but it also produces a higher ability to consume.  By delaying consumption, one not only builds a base of capital for purchases, but saves interest payments to an outside source.  This savings is additional capital to use for various purposes.