The universe exists in the “GAP”.

The small space between the blueprint of all possibilities in the mind of the creator and material reality.

“What do you mean, Peri? This is a personal finance blog..”

The "GAP" , in the context of personal finance, refers to the small space between what you earn and what you spend.

The gap is all powerful. It is the difference between wealth and poverty.

This simple concept has so many wealth building possibilities it boggles the mind. The GAP also defines us as people. Let’s explore a few different ways..

Credit - Without maintaining a GAP consistently over time, it may be difficult to develop good credit. A good or great credit rating will be your ticket to advanced wealth building. Most rich people got that way using credit or “other peoples money”. This is the key to leverage. You must use borrowed money to maximize your investment potential. If you are able to borrow money and have a credit card and/or a line of credit in good standing, then you have the tools you need to do some amazing things, which I talk about in my books and courses..
Forward Movement - The old saying is “you’ll never go broke making a profit”. This is true in business and in personal finance. You eliminate almost all of your potential for financial freedom if you cannot maintain the GAP continuously.
Peace of Mind - Having a positive differential between what you earn and what you spend has massive psychological benefits. It will bring you happiness and may even increase your usable IQ. The book Scarcity demonstrates that money worries will use up brain power you could be using for other things and demonstrably lowers IQ.

It is Hard

Step ONE of financial freedom is creating the GAP. Spend less than you earn. This is a simple concept and is easy to understand, yet is often extremely difficult to do. We are so used to spending money we don’t have that we think it is just part of everyday modern living. I am suggesting that this is now considered a rare skill.

Living below your means is something our parents and grandparents were very good at. As kids, we though of them as “cheap”, but they actually had the right idea. The great depression caused a mass adherence to frugality and thrift which, over time, has eroded due to the availability of credit.

Creating and maintaining a GAP requires self-discipline and sacrifice. It requires long-term thinking and well defined priorities. These are things that the modern world has not required of us as often as it did for our forefathers. Modern convenience has made many things instant, and easy. We can have many of our needs met with the push of a button on a smartphone. This is awesome, but it fools us into believing that everything is that way. The real hard truth is, most things that are worthwhile and valuable still take hard work and time to accomplish. This includes financial freedom.

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Thrift

Cutting back on a few lattes on the way to work is not going to do it for you. You need to make big decisions about big things. Your efforts to create a usable GAP could possibly require you to make decisions about where you live, where you work and how you get from A to B. These are major lifestyle factors that have the biggest impact on our financial lives. By re-examining the major monetary burdens we have, we can make the most headway towards our goals.

Because it is so hard and, perhaps, disruptive to create a solid GAP, we should focus solely on achieving this state of being and nothing else. The carrot at the end of the stick is “advanced financial strategies that will build your wealth quicker than you ever imagined”, but until you get there it is just fantasy.

It is incumbent on you to build a solid foundation of “spending less than your earn” and proving to yourself you have the self-discipline to stick to it, even when it requires sacrifice. Once you have developed the habit and character to do this consistently you are ready for the next steps. Until then, your investing efforts will be on shaky ground.

The benefit is not just financial. You will have become the kind of person who deserves and can handle wealth. Giving money to an idiot will result in a broke idiot in a relatively short amount of time, but giving money to the right person will result in even more prosperity. I use the Jim Rohn saying quite often:

“If someone gives you a million dollars, you better hurry up and become a millionaire”

Being someone who deserves and can be trusted with money requires embodying the traits of self-discipline, discretion, and long-term perspective. Working towards creating a GAP in your financial life as it is currently will help you develop those traits and you will be well-equipped to move forward and implement the advances strategies that are available to you in my books and courses. You cannot succeed in the world of money without these fundamental traits.

There is a magic formula to wealth and the GAP is it. The cool thing about the GAP is that it is available to everyone. All it takes is hard work and the aforementioned character attributes. No matter how much money you earn, you can find a way to consistently spend less than you earn. Once you have mastered this skill, the world is your oyster. There are a ton of ways to leverage and maximize your GAP money that will astound you.

The good news is, its simple

The bad news is, It’s really hard.

Just like Golf.

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