Principles for Building Quiet Wealth
The Timeless Formula for Building Wealth
Wealth-building may seem complex or intimidating, but the truth is, it’s rooted in principles that have stood the test of time. The fundamentals of creating financial stability and abundance may seem boring and unexciting compared to the loud luxury that the internet constantly bombards us with. These basics rely on small, consistent choices over the long term—not taking big risks and relying on big returns from any one investment. There are several ingredients to the formula we explain below, but if there is any one thing to takeaway: stay in the game, consistently, for as long as possible to stay on course towards quiet wealth.
1. Live Below Your Means
Maximize the delta between income and expenses for wealth accumulation. While seemingly obvious, this is perhaps the most difficult rule to actualize because of the pressure to keep up appearances. Choosing modest housing, reliable cars, conscious shopping for fashion, and limiting meals eaten at restaurants are the most effective ways to shift from loud luxury to quiet wealth. Living below your means doesn’t mean deprivation; it’s about prioritizing long-term financial freedom over short-term indulgences.
A recent Wells Fargo study showed how Millennials are obsessed with looking rich, with more than 40% believing it’s important to have visible signs of wealth, whether it be purchasing a fancy car, clothing, or place to live—compared to just 21% of Gen Xers, 8% of baby boomers, and 7% of the silent generation. Currently more than 40% of Millennials relying on credit cards or loans to fund their lifestyle, revealing the pressure that each new generation faces as they navigate the mimetic models that exist today. These mimetic models as coined by Rene Girard, or forces that shape the things we desire, feel closer than ever due to the parasocial relationships we now all experience across social media. Our mimetic desires mislead us into believing that if we fake it till we make it, we will be accepted by the social class above us and subsequently earn more.
![Wanting: The Power of Mimetic Desire in Everyday Life [Book]](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F442c626e-63fc-42cc-b45a-db2e9b12be55_1676x2560.jpeg "Wanting: The Power of Mimetic Desire in Everyday Life [Book]")
One helpful rule established in Rich Dad, Poor Dad by Robert Kiyosaki is to only buy luxury goods when you can afford them with your passive income alone. When you live below your means, you have more money to invest in compounding assets. For example, Sarah, a graphic designer, chose to buy a used car and live with a roommate, even after earning a six-figure salary. By redirecting the money she saved into investments, Sarah’s portfolio grew to $500,000 within a decade. Compare this to Jack, who financed a luxury car and rented an upscale apartment. Jack earned more but saved less, delaying his financial independence by years. Modest choices compound over time, leading to greater financial freedom.
2. Save Aggressively & Early
Building the habit of saving as early as possible is crucial. The earlier you start, the more powerful compound interest becomes. Even small contributions can snowball into significant wealth over decades. Starting at age 25, saving just $300 per month with an 8% annual return grows to over $1 million by age 65. Waiting until 35 to start reduces that total by half. That being said, it's never too late to begin. The next best time to begin is today.
Do not let late starts get in the way of strong finishes. Just like with exercise and healthy eating, time and consistency are your strongest allies when it comes to saving. The earlier you start, the smaller percentage of your income you are able to set aside to achieve the same level of wealth as somebody who starts later. Establish a percentage of your income—start with at least 20% if possible—that you can comfortably set aside and then increase that number proportionally to any income increase over your lifetime. Avoid letting your expenses rise with your income, knowing that the amounts needed to retire continues to increase.
3. Ignore the Noise
Every generation faces distractions, pressures, and FOMO (fear of missing out). This generation’s distraction can be found in cryptocurrency speculation. Even if there is value to be found in a few currencies, the amount of overnight millionaires created from getting lucky on speculative alt coins—take Dogecoin and the recent $Trump coin for example—is causing too many people to chase the bag. The reality is over 80% of day traders lose money, according to a study by the National Bureau of Economic Research. Big money continues to develop more sophisticated algorithms to drive their investments, while the individual consumer is left holding the bag.
Many fall prey to sensationalized trends rather than sticking to a disciplined investment strategy. Dollar cost averaging in a balanced portfolio is the best way to build wealth in the long-term, even if it is the most boring. For every overnight millionaire, there are thousands of people who lost money chasing the hype. If you feel so strongly that the noise is real, ensure you are only investing what you are willing to lose and that it is in addition to good financial practices—not instead of it. Think in increments of five and ten years, rather than fixating on trends, headlines, earning reports and quarterly changes.
4. Wealth Is What You Don’t See
Over 90% of millionaires attribute their wealth to regular investments in unseen assets, like equities and property. True wealth isn’t in flashy cars or designer clothes but in assets that compound quietly over time—stocks, real estate, and retirement accounts. In the Psychology of Money, Morgan Housel explains how nobody ever cares about the person driving the luxury car or dressing in designer clothes, they only imagine themselves in it. Don’t get distracted by looking rich and stay focused on investing in unseen wealth.
The decisions you make today should align with the lifestyle you want tomorrow. Permanent life insurance exemplifies this idea of stealth wealth: an asset with tax-advantaged wealth benefits, with a minimum of five to ten year time horizons before the compounding effects really take effect, that can be accessed during your lifetime or leveraged for estate planning purposes. Sacrificing short-term pleasures can pave the way for lasting financial security. Studies show that 39% of Americans regret not saving more for retirement, often citing unnecessary spending as a barrier. Remember, wealth grows quietly and often goes unnoticed until it’s substantial.
Key Takeaway
Wealth is a function of time, and time amplifies your financial decisions, so stay the course. The longer you stay in the game, the greater your rewards. Consistent contributions and patience allow compounding to work its magic. Albert Einstein reportedly called compound interest the “eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it.” Even modest annual returns can double your money every 7-10 years. Wealth-building is boring—and that’s why it works. The small, consistent steps yield the most reliable results. The next step after understanding and practicing these fundamentals is putting real numbers behind the goals you hope to achieve. In our next blog, we will explore the difference between being rich and wealth, and look at what it takes to achieve different levels of wealth.
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