How to become rich

I, too, have fallen prey to the idea that the more you earn, the wealthier you'll become. This, however, is a fallacy. The more you earn, the more potential you have to save.



But us humans neglect to save more when we earn more. Witness the fact that lottery winners seem to always end up broke, couples cannot "get by" on $200k per year, and poor immigrants retire wealthy.



It's all about priorities: Save now or save later. Saving now, thanks to compound interest (and compound earnings on investments), builds wealth much faster and more reliably. Plus, you have time to correct investment errors and poor timing.



Greg Mankiw's Blog: How to Become Rich