July 14, 2024
How Bill Gates Built His Wealth: 'Save Like a Pessimist'

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Bill Gates is one of the richest people to ever live, but how did he get that away? Well, aside from the obvious — he’s a computer and business genius — he’s also a master saver. That’s right, even Bill Gates thinks about savings.

What he does, according to him, is he “saves like a pessimist, invest like an optimist.” But what does that mean exactly? Let’s breakdown how Gates built his wealth by saving like a pessimist.

Saving Like a Pessimist

When Gates says “save like a pessimist,” he means always be ready for bad things to happen — which, to be fair, will happen. When he started Microsoft, Gates had a rule: always keep enough money in the bank to run the company for a whole year, even if they didn’t make any money during that time.

Why did he do this? Gates was worried about the people working for him. He thought, “What if we can’t pay them? They have families to take care of!” By saving a lot of money, Microsoft could survive tough times when other companies might have gone out of business.

Think of it like having a really big piggy bank for emergencies. If something bad happens, you have money saved up to help you get through it.

Investing Like an Optimist

But Gates didn’t just save money. He also spent money on things he thought would make more money in the future. This is the “invest like an optimist” part. Even though Gates saved like he thought bad things might happen, he spent money like he believed good things would happen later on.

Gates put money into new ideas and technologies that he thought would grow and become more valuable over time. He believed that in the long run, things would keep getting better, even if there were some problems along the way.

This positive thinking led Microsoft to create new products and grow into different areas of technology. It’s one of the big reasons why Microsoft became such a huge and successful company.

How You Can Use Gates’ Money Trick

You don’t have to be a billionaire to use Bill Gates’ money trick. Here are some ways you can save like a pessimist and invest like an optimist:

  1. Save for emergencies: Try to save some money each week or month. This is your “just in case” money for when unexpected things happen.
  2. Think long-term: When you put money into investments, they will fluctuate in the short term. That’s a fact. However, when you think in the long-term, you’ll be able to see that the trajectory trends upwards. Stick with it and reap the rewards. 
  3. Balance safety and growth: Yes, safety is good in that it’s as close to a guarantee as we have – but not everything can be safe.  It’s good to take some risks to grow your money – just make sure to balance it with safety.
  4. Keep learning: If you want to make big money, you have to know your money. Learn everything you can about finances and investing – and then put that knowledge into action. Knowledge is power and that’s never been truer than with your bank account. 
  5. Plan for problems, but work towards goals: Yes, things go wrong, and that’s what emergency savings are for. Make sure you have that, but then also have a growth mindset. Keep one eye on your bank account and the other on the future. 

Gates used this way of thinking about money for many years, and it (obviously) worked really well for him. From 1995 to 2017, Gates was called the richest person in the world 18 times! His idea of careful saving mixed with positive investing can lead to big success.

Remember, though, Gates didn’t get rich overnight. He worked hard, made smart choices, and stuck to his money plan for a long time. By following his advice to “save like a pessimist, invest like an optimist,” you too can build a strong money future. You probably won’t become as rich as him, but you can definitely improve how you handle money and work toward your own goals.

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