Sorry. The bad news is there is no secret sauce. No magic potion. There are no shortcuts or warp zones (yes, that is a Nintendo reference).

But, there is good news: you don’t have to do any somersaults, cartwheels, back flips, or high dives to become wealthy.

Instead, just walk over and do it. Okay, maybe walking is too slow. But, the point is that becoming wealthy is a marathon, not a sprint, and there are no shortcuts.

Becoming wealthy requires four things:

  • Spend less than you make.
  • Have emergency savings.
  • Have diverse investments.
  • Rebalance regularly.

Sorry, I know that is boring.

Don’t waste time and energy on things that create an illusion of financial progress. Instead, make slow and steady steps toward wealth. One step at a time.


Don’t Waste Energy on Illusions

People spend lots of precious time and energy on things that create an illusion of progress. Don’t be fooled. There are much bigger, more important things you can do that will make a real difference in your finances.

A few examples:

Credit Card Rewards

As mentioned in a previous article about the Risks of Using Reward Credit Cards, studies have shown that using a credit card instead of cash or debit increases your spending by more than the 1%-2% cash back.

Using a credit card to get rewards, even if you “pay it off every month” is likely reducing your wealth, not increasing it. That’s because you’re very likely spending a bit more per month than you would if you used cash or debit, and that increased spending is more than your rewards.

Don’t believe me? That’s fine, prove it. Ditch the credit card for 3 months, just use cash or debit, and see. I’d be willing to bet your spending decreases.


Shuffling Debt Around

Refinancing debt can have some small advantages. But, don’t let them convince you that it will help you get out of debt. You can’t borrow your way out of debt. Calculate your break-even date and make sure that you aren’t spending more on closing costs than you will save on interest in a very short period of time.

Spend your time and energy figuring out how to get out of debt instead of shuffling it from lender to lender.


Other Wealth-Building Illusions

There are a ton of websites offering “Money Hacks“. Supposedly these hacks will help you save a bunch of money. But, these sites are almost all just paid advertisements for the “hacks” that they represent. Here are some of my favorite money hacks that waste time, make you feel like you’ve done something, and lead to complacency:

  • Online surveys
  • Sign-up bonuses for apps
  • Starting a small business solely for the tax write-offs.
  • Shuffling money from bank to bank for sign-up bonuses.
  • Changing savings or money market accounts for less than a 1% increase in APR.
  • Gimmick side-hustles that pay almost nothing per hour (i.e. online surveys, ad-based lottery apps).
  • Playing the lottery.
  • Micro-Investing (i.e. Acorns or Stash).
  • Day-trading stocks.

The Risk of False Confidence

As I mentioned in an earlier article about Gimmick Investments, there is a real risk in these illusions.

By doing a bunch of tiny things that either make tiny progress or actually set you back, you get a false sense of accomplishment. That can lead to complacency and set you down the path to miss opportunities.

I hear it all the time from stock traders. They will often describe their day-trading activities and sometimes even make money. However, nearly every time these stock traders are doing a ton of work and research, taking a ton of risk, and not adding significantly to their wealth. Sure, they might make $500 here or there, but at what risk?

Instead, I prefer real, significant, recurring, rates of return. Slow and steady wins the race and produces a nice big nest egg when retirement comes around.


As a reminder, fully-investing in a Roth IRA from 25 to 65 with moderate returns will get you a nest egg of between $1.5 million and $2.0 million. A conservative 4% withdrawal rate on that is $5,000 to $6,000 per month of income during retirement.


What would you rather have: $500 every so often, or $6,000 per month for the rest of your life?


Big Rocks

So, what should you do instead?

My first job after college was a sales job. As a salesman I learned that my career sweet spot is analysis… not sales. But, one of the biggest lessons I remember was during a training from my District Manager about scheduling. He taught us about Big Rocks.

This particular sales job allowed me to set my own schedule and be my own boss. As a new college graduate, there was a risk that all this new freedom was a recipe for failure. To avoid wasting time or letting weeks slip away without getting important tasks done, he suggested using Big Rocks to build our calendars.

Think of an empty jar. You have some big rocks, some pebbles, and some sand that you have to get into that jar. If you start with the sand and work your way up, you might add too much sand and not be able to get your big rocks into the jar.

But, if you start with the big rocks and work your way down, then the pebbles and sand can shift around inside the jar and fill the gaps between the big rocks.

The big rocks are the important things on your schedule. Put them in first, block the time out, give yourself the opportunity to really focus. Then, allow less important things to fill in your schedule in between the big rocks. That way you will always have time for the important things.

For wealth-building, there are four big rocks:

  • Spend less than you make.
  • Have emergency savings.
  • Have diverse investments.
  • Rebalance regularly.

Without these four things the likelihood of you becoming wealthy is practically 0%.

I guess that makes them pretty important.

I guess that makes them Big Rocks.


Final Thoughts

Personal finance is hard. There are a ton of distractions vying for our attention at every turn. It can be overwhelming to sift through the nonsense to get to the important stuff.

So, try to ignore all the gimmicks. Focus on spending less than you make, having a healthy emergency reserve, building diverse investments, and rebalancing.

Then, after you have really nailed those four big rocks, if you want to go back and fiddle with intro-offers for savings accounts, cash-back credit cards, or buying a scratch-off ticket, go for it.

But, until then, those are just distractions that are getting in the way of real progress toward building wealth.


I hope this has been helpful! I welcome your comments with your thoughts and questions. And, don’t forget to subscribe to the newsletter to get notified whenever a new article is posted.

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