Unlocking Wealth: What a Retired Investor Means by ‘Rich People Don’t Buy Things, They Buy Leverage’

I was enjoying some flatbread when my friend’s dad, a retired investor, said something that caught my attention: “Rich people don’t buy things — they buy leverage.”

He explained that leverage isn’t just about loans; it’s any tool that multiplies time, skills, or money. For example, rather than spending on a flashy car that loses value, investing in a small business or tools that save time makes more sense.

This idea stuck with me. I started thinking about my own spending. Are my purchases helping me grow or just giving me temporary joy?

Evaluating My Spending

To answer this, I pulled my credit card statements. I looked at each expense. Some costs were clear misses: overpriced lattes, impulse buys, and workout clothes that didn’t motivate me. But some expenses surprised me. For instance, a $25 subscription for a speech-to-text tool helped me write faster and generate more articles.

Seeing my spending laid out like this changed my perspective. I began to view every purchase through the lens of leverage: will this item add value over time or just be a fleeting joy?

The Downside of Lifestyle Inflation

Research shows that as people earn more, they often fall into “lifestyle inflation,” where everyday wants quickly turn into needs. A person might suddenly feel inadequate about their car or apartment after a pay raise. Instead, leveraging investments creates lasting benefits. For instance, buying a camera lens can lead to more photography clients.

Psychologists refer to this as gaining “intrinsic rewards.” It means that when you invest in leverage, you achieve long-term benefits, like autonomy and increased income.

Three Types of Leverage I Underestimated

1. Skill Leverage: Learning a new language, like Spanish, can open doors to better job opportunities. I redefined my Spanish lessons as a necessity rather than just a hobby.

2. Network Leverage: Building professional relationships can be more valuable than you think. I started viewing networking events as essential meet-and-greets that could lead to new projects.

3. Systems Leverage: Handling tedious tasks like invoicing can eat up your time. Hiring an assistant freed up hours for me to focus on writing and creativity.

Overcoming Emotional Spending

After reassessing my purchase habits, I faced temptation when I stumbled upon a sale for high-end cookware. While I felt an urge to buy, I remembered Rudá Iandê’s insights about our spending narratives. Many purchases reflect the image we want to show, rather than what truly benefits us.

A One-Month Experiment

I decided to run a 30-day challenge: any purchase over $30 had to prove its value in generating leverage. At the end of the month, I saved about $460 and added an extra $600 in income. Plus, I felt less cluttered—both mentally and physically.

Shifts in Mindset

Through this experiment, I learned to view money as a tool rather than a measure of success. I started asking myself critical questions about my beliefs and what truly brought me joy.

1. Question Beliefs: Scrutinizing the idea that “stuff equals success” opened my eyes to unnecessary expenses.

2. Listen to Your Body: Noticing how certain purchases made me feel helped guide my spending in a better direction.

3. Emotions Are Messengers: Instead of yielding to FOMO, I channeled creative energy into home-cooked meals.

Common Misconceptions about Leverage

1. Leverage Means Debt: Not true! Leverage can come from optimizing tasks without borrowing money.

2. Only Entrepreneurs Need Leverage: Whether you’re a teacher or a healthcare worker, leveraging your skills helps create future time.

3. Leverage Is Risky: Rational leverage—backed by research—can actually reduce risk by diversifying income.

Quick Leverage Strategies

Here are five easy ways to incorporate leverage into your week:

1. Knowledge Lever: Read a relevant article and share insights on LinkedIn.

2. Tool Lever: Automate a recurring bill to save time.

3. Health Lever: Trade a night of binge-watching for a brief stretching routine.

4. Connection Lever: Reach out to a peer and offer help.

5. Mindset Lever: Identify triggers for impulsive buying to better manage spending.

What Happens When Leverage Fails

Leverage isn’t perfect. I know someone who mismanaged debt while trying to grow their business. Others may over-rely on help and lose their creative touch. It’s essential to adjust your leverage strategy based on results.

The True Benefit of Leverage

The most significant gain from this whole process? Time. I found myself hiking more, chatting with friends, and enjoying life without always checking my watch. I learned that leverage isn’t just about money—it’s about enriching life.

In conclusion, the wise investor’s words still echo in my mind: “Rich people don’t buy things — they buy leverage.” Shifting how I think about expenses has opened doors to greater impact and freedom in my life. So next time I ponder a purchase, I’ll remind myself: does this create leverage or just clutter my day?

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