The Wealth of the Simple Life – Gustavo Cerbasi

The Wealth of the Simple Life – how smarter choices can help you achieve your dreams, is an excellent book written by Gustavo Cerbasi, in which he talks about how our future depends exclusively on the present.

It is therefore essential to make the right choices today in order to guarantee a balanced and better future, both physically and financially.

Throughout the book, the author also talks about the importance of letting go of consumerist habits and anything that makes us stay in the same place.

To do this, you need to develop self-knowledge.

That way, your simple life today can become a life of wealth tomorrow.

Gustavo Cerbasi

Cerbasi is a Brazilian administrator, lecturer, teacher, financial advisor and writer.

With academic and practical experience in business finance, family planning and home economics, he provides consultancy, lectures and training for different audiences throughout Brazil.

It’s also worth noting that Cerbasi was recognized by Época magazine as one of the 100 most influential Brazilians.

You should also know that he has a degree in public administration and a master’s degree in administration/finance from the University of São Paulo.

Finally, he has a specialization in finance from New York University and the Fundação Instituto de Administração.

In addition to his book The Wealth of the Simple Life, the author also has other titles such as Smart Couples Get Rich Together, How to Organize Your Financial Life and Smart Investments.

It is possible to get rich by saving and investing correctly, regardless of social class

Many believe that financial independence is an unattainable dream, especially for the lower classes. The lower classes are the ones with the highest tax burden and excessive consumption.

And when we think about the upper classes, it’s also not easy to achieve independence because individuals struggle to maintain their standard of living, paying absurd amounts for housing, for example.

But through the book The Riches of the Simple Life, we understand that the first step towards freedom is to answer the following question truthfully:

Do you work to live or do you only live to work?

If you currently live to pay the bills and all your credit card bills, have debts and receive a small salary, you are probably living to work.

On the other hand, those who have an organized budget, know exactly what their dreams are and are saving to achieve them, work to live.

The group of adult millionaires spread around the world is 1.2%.

This group alone has 47.8% of the world’s wealth.

And when we observe that a small portion of the world’s population can be considered truly wealthy because they don’t depend on work or worry about money, we might wonder the following:

Is prosperity something restricted to a certain group of people? 

According to the book The Wealth of the Simple Life, those who cultivate this kind of mentality think in two ways:

The first is that no effort can be made to achieve wealth and financial peace of mind.

So these people live their lives in a disorganized way and are unlikely to achieve their dreams.

The second group is those who believe in completely improbable methods such as playing the lottery or going into business that promise easy gains in a very short time.

Think of a person who has been helped to get into a big company.

If this person doesn’t show that they really do have the skills and make the effort to obtain the necessary knowledge in order to work for that company, they will certainly lose their opportunity.

In other words, the author says in The Riches of a Simple Life that success depends exclusively on you.

Investing in the financial market is a matter of seeking knowledge and dedication.

If you believe that none of this is within your reach, it’s probably because you need to seek out more knowledge.

There are hundreds of books, videos and articles all over the internet about financial education and investments, but it’s up to you to seek them out.

Spending

When we talk about living a simple life, one of the first things you should think about is your spending.

First, we can mention the low-income families who face the toughest problems.

Their salaries are often so low that they barely have enough to eat and meet their basic needs.

In this sense, telling them that they need to save money may seem like a bad joke.

However, although the public faces great difficulties, it is also interesting to recognize certain mistakes.

In the book The Wealth of the Simple Life, the following question arises:

What led a family to face this financial situation today?

Perhaps if this family had invested the little money they have in financial education and training, they wouldn’t be in this situation.

And when we talk about investing what little they have, we don’t just mean money.

We can also look at time.

Nowadays, there is a lot of free content on financial education on YouTube, including how to earn extra income.

These families must invest in a valuable resource to ensure that their finances improve. They need to invest the time to learn and change reality.

The Wealth of Simple Living – Spending by middle-class people

On the other hand, you’ve probably heard about middle-class people who live to maintain a status, something that costs a lot of money.

Often, the person doesn’t have the worst salary in the world, but they live in the worst possible financial situation because they have adopted a lifestyle that is beyond their means.

They spend extravagantly on cars, real estate, schooling for their children or designer clothes.

Note that we’re not saying you can’t have any of these things, but there’s no point in spending all your money on such things to maintain your status.

You can tell that these people live to please others because they find it difficult to recognize their mistakes and admit that they spend too much.

When the author of The Wealth of the Simple Life makes us think about the long-term situation, the family could face a serious financial crisis.

As a result, this will lead to frustration, because it will be necessary to reduce all costs.

This audience is worse off than a low-income family, for example.

This is because many middle-class people want to live a reality they can’t afford.

This class suffers the most from taxes and consumerism because most credit lines and advertising campaigns are aimed at this public.

However, as is the case with people on low incomes, one of the biggest mistakes made by this group is that they find it difficult to recognize their mistakes.

The Wealth of the Simple Life – Without recognizing your mistakes, it’s impossible to make different decisions

In this sense, the individual will spend the rest of their life making bad choices and this will be passed on to their children.

So it’s worth repeating here a financial principle that should be clear in your mind:

For most people who have financial problems, earning more money every month will not solve everything.

To finally turn the situation around, you have to recognize your mistakes and change your choices.

In this way, you must learn to invest in the present, so that you have a future with fewer financial worries.

Investing money is fundamental for people on low incomes, the middle class and even the rich.

However, according to the book The Wealth of the Simple Life, in order to invest you need to follow certain processes, with great dedication, interest and a good strategy that needs to be followed with discipline and patience.

The secret is to accumulate as many resources as possible without spending everything you earn.

When the traditional method doesn’t work

So far, we have understood 3 fundamental principles:

The need to organize finances, get money together and start investing.

But it’s precisely at this point that various excuses arise.

“I can’t organize my finances because I’ve never been taught about financial education, I don’t know where to start.”

In The Wealth of the Simple Life, the author says that there are also excuses for saving money:

“I earn little and have nothing left over to invest”.

There are many excuses, and here too there is a common mistake: thinking that the money you invest is just what’s left over after you’ve paid the bills and enjoyed the month.

The amount you decide to invest each month has to be treated as an account.

In other words, as soon as you receive your salary, you automatically set aside the money for investment, rather than waiting for some amount to remain.

So, ideally, you should drop the excuses.

Stop saying that if you had a car you could increase your income or that you don’t invest in knowledge because you don’t have the necessary financial resources.

Don’t wait for the ideal condition to act, because if you do, you’ll never get out of the same place

In The Wealth of the Simple Life, we learn to work with the tools at our disposal and make plans according to our current conditions.

For example, instead of waiting for a promotion at work, dreaming of a salary that will be double the current one, start organizing yourself financially with the salary you receive today.

There will certainly be limitations, and you shouldn’t ignore them, but understand that you can overcome each one as your plans evolve.

Don’t expect the process to be simple, because you will encounter difficulties and unforeseen events.

Despite this, you will learn every day how to deal with adversity in the best way possible, maintaining the persistence to win.

The Wealth of Simple Life – Specific dreams

Do you know how much your dreams cost?

For example, if you plan to go to university next year and would like to set aside the cost of your first year’s tuition, do you know all the costs involved?

It could be that the tuition fees for 12 months total US$30,000.

However, you also have to worry about other expenses such as housing, food or even the application fee.

The more financially specific your dreams are, the better, because you won’t get a negative surprise in the future.

Be fully aware of how much your dreams cost in order to understand how soon you can achieve them.

According to the author of The Wealth of the Simple Life, starting from a deadline, you can also understand the steps you need to take on a daily basis in order to achieve all your goals.

When a simple idea or dream is transformed into an organized budget, savings, investment choices and concrete actions, we finally have a plan.

Backup plan

Let’s say you set out with the above dream, worked all year to achieve it, but because of various problems, only managed to save half the amount you needed.

What would you do in this situation?

Note that when you have a backup plan, you don’t have to act without thinking.

This happens because before anything goes wrong, you’ve already considered the worst-case scenario.

Returning to our example, let’s assume that from the outset you had determined that if the amount wasn’t reached you would change the deadline and work towards earning more extra income.

This gives you greater peace of mind when the initial plan doesn’t work out.

One of the best tips in The Wealth of the Simple Life is to understand that a plan must be alive.

In other words, it can be modified at any time if this will help you achieve your goals.

Having a backup plan doesn’t mean you’re a failure, but it does prove that you’re intelligent.

Planning

When we choose how we will use our income, taking into account our goals, we are defining a standard of living.

Good planning consists of evaluating your remaining monthly resources.

And also, studying the standard of living you can afford with that money.

As well as defining dreams that you want to achieve and turning them into goals.

Talking a little more about the standard of living according to The Wealth of the Simple Life, it’s worth noting that the structure is similar to that of a plan.

In this way, the standard of living can also be modified, taking into account our current scenario.

There’s no shame in lowering your standard of living because you’ve started to receive a little less.

What’s worse is wanting to maintain a standard of living you can’t afford and ending up in debt.

In this sense, choose a strategy to establish a good way of reducing the costs of your standard of living.

Another fundamental tip is not to make this change suddenly.

Changing your standard of living, especially the idea of lowering it, can take time.

You need to get used to this new reality and even show your family that this is the best choice.

It’s not enough for you to stop spending lavishly while your children go to the mall twice a month and spend hundreds of dollars so that you can pay off the card bill later.

A plan must be followed by all members of the family.

It’s better to have a balanced life than to suffer working all your life to maintain an illusory lifestyle.

The Wealth of Simple Living – How to change your standard of living

Cutting unnecessary spending is something you already know, so think about other options.

Consider living in a cheaper house, neighborhood or city.

Even if it’s more affordable to live in another country, consider it, as long as this choice contributes to the realization of your dreams.

In this case, consider starting all over again.

Completely get rid of your current life, the place where you live, and start looking at new possibilities.

See where your skills can be put to better use or learn new things like a new language.

Don’t let your financial reality get you down and start working to change it.

If you’re not willing to make such a drastic change in your life, consider moving to a simple house in the countryside.

The author of The Wealth of the Simple Life suggests that:

Perhaps in this house you could start producing your own food.

That way, as well as having a new hobby, you can also save money at the market.

If you don’t want to live this lifestyle, there is still the possibility of moving to a small town with fewer tourists and more affordable prices.

Ideally, you should carry out thorough research so that you can find good options, despite having limited resources.

The young mentality

While it is difficult for many people to break free from their comfort zone and opt for a simpler life, today’s generation is trying to write a new story in search of more planning and avoiding consumerism.

This means that young people live differently from their parents.

Through connectivity, many young people’s ambition today is to obtain the resources to be more connected to the internet.

As a result, they think less about things like cars or housing.

The focus is on experiencing new experiences, given that connectivity allows access to an unlimited level of information.

According to the author of The Wealth of the Simple Life, young people are willing to limit their spending on a car or house.

As a result, they choose to rent a vehicle for when they need it or live in a shared house.

This audience understands that processes are necessary to achieve wealth and that living a simple life can be very satisfying.

We are not saying that you should rent a room to live in with your family if you are already a father, mother, husband or wife.

What’s interesting is that you should analyze the fact that it is possible to reduce your expenses, just by focusing on your objectives.

A simple life is the path to a life richer in present experiences and in fulfilling future actions

Another interesting point addressed in The Wealth of the Simple Life is to think about your quality of life.

You need to be healthy to pursue your dreams.

So don’t overwork yourself or set goals that are clearly unattainable.

Note that the author does talk about the future, but he also mentions present experiences.

Something that determines whether you will have a quality of life or not is your mindset with regard to the present.

No matter what your financial situation or the size of your debt or the severity of your problem.

Your life should never be limited to the idea of eating, working and sleeping.

If this happens, you must take action.

Goals are meant to give you small rewards along the way when you achieve them.

Therefore, the author says in “The Wealth of the Simple Life” that our life should be made up of making dreams come true.

Don’t just cultivate a dream that you can achieve in 10 years.

From the first year onwards, you’ll certainly feel demotivated because you’ll have to work for a long time to achieve that goal.

Why do you want to achieve a particular dream?

Going back to talking about specific dreams, considering the example above, have you ever considered why you want to raise money and go to university?

Perhaps you want to save up money so that you can have greater peace of mind.

And, in the first year, study without worrying about debts.

In addition, you may want to finish university to provide a better standard of living for your family.

You probably want to have a good job and finally be able to finance the house of your dreams.

There’s no problem with dreaming in a specific way. It’s even said in The Wealth of the Simple Life that you need to dream in a specific way.

Don’t just limit yourself to planning, deadlines or goals, you need to understand the real reason why you’re doing it.

This will keep you motivated to keep working as hard as you can to achieve your dreams.

Cascading effect

Let’s assume that a person’s goal is to change their lives.

They’ve worked hard and paid off their debts, so it’s time to use their resources mainly to invest in their dreams.

However, this person’s child goes to a private school, where the total tuition is $15,000 per year.

Despite this, you have to think that this type of expenditure has a cascading effect.

In other words, in addition to paying tuition, in a few months you’ll have to pay for materials.

At the end of the year, there are those famous excursions to other countries, which also cost a lot of money.

When you consider your monthly expenses, always think about the ripple effect mentioned in The Wealth of the Simple Life.

And understand whether your financial planning will be respected or excessive spending is foreseen.

Be honest with yourself and keep in mind that what makes our lives complicated is spending unwisely.

As well as thinking about the ripple effect, also analyze the need.

Recognize that it’s not just because you can afford something that you really need.

Self-knowledge generates authenticity

We asked a little above why you want to achieve a certain dream in order to structure a good plan.

But thinking about this question is also important to ensure that you are not trying to achieve someone else’s dream for your life.

According to The Wealth of the Simple Life, this comes mainly from external influence:

So, a person may dream of buying designer clothes and the most expensive shoes because the consumerist world encourages them to pursue that dream.

Also, you might want to go to medical school because your parents have always wanted you to become a doctor.

Living other people’s dreams will make it extremely difficult for you to achieve them because, deep down, you don’t care.

You may even be able to achieve these goals, but they will never be sufficiently satisfying and good for your life.

So value self-knowledge.

We don’t recommend that you only read finance-related books to improve your financial life.

When you know yourself and get to know yourself through personal development books, you understand exactly what you need and where you need to direct your efforts.

So study to get to know yourself and improve your financial life.

Authenticity consists of breaking patterns, not doing what the majority are doing.

Also, not listening to those who have different goals from you and paying more attention to what you want.

The Wealth of the Simple Life – Retirement

Most Americans think about setting up a pension plan between the ages of 30 and 35.

This happens usually after they have children.

In other words, people don’t consider saving until they have children.

However, this thought shouldn’t only arise at this time.

An indispensable goal for everyone is to prioritize retirement, so don’t put this plan off until later!

Finally, remember that true wealth consists of living without missing anything.