“How did you go bankrupt? Bill asked. “Two ways”, Mike said. “Gradually and then suddenly.”
– E. Hemingway, The Sun Also Rises (1926)
Once we make some money, how do we keep it?
There are many articles written about how to make money, some are shady and some are legit. But there are few articles written about how to keep money once it’s made.
Perhaps because, as a general rule, we spend a lot of time thinking about making money, and very little time thinking about not losing money.
So here are a few thoughts on how to keep money once you make money…

Have a Plan
Whether you are just starting out or have already built a “nest egg”, the punchline is straightforward: Live within your means.
Easy to say, hard to do.
As your career improves and your income increases, it is tempting to raise your level of personal spending.
I have friends in New York City who are very successful with seven-figure incomes, but they spend every penny.
Good times are not guaranteed to continue forever.
Spend time thinking about your short and long-term goals, and set aside money for each of these goals.
As your income increases over time, make a conscious effort to use the additional money to meet the goals you have established. And, until you do, try to hold off on upgrading your closet or trading in the car for a newer model.
It may sound trite, but you should create a budget.
Always know how you are spending your money. If you know where your money is going it makes it easier to make necessary trade-offs. It also makes it easier to see that your short and long-term savings goals are probably more important to you than some of the other expenditures.

Invest, Don’t Speculate
Too much of social media is caught up in get-rich-quick schemes.
Most of them are just that, schemes.
Yes, that story on IG or YouTube about that person who made a huge amount of money in a week or two is exciting. And it might even be true. But there is nothing about that that involves investing.
That is pure speculation.
Investing is unemotional.
It is about having a plan and having the conviction to execute the plan. Emotion and greed cloud judgment, so don’t be emotional.
Diversify.
Any solid investment plan includes diversification. With so much information being thrown at us every day it’s easy to be lured into making one or two big bets. The stories sound so convincing!
Putting the majority of our money into one or two big bets is not investing, it’s speculation. As long as we know the difference we can make the right decision. Unless you are a professional investor with many years of experience, diversification should be an important part of your plan. Once you have a plan, have the patience to stick with it. Get rich quick schemes almost always end badly.

Luck vs. Experience & Skill
2020 was a very unusual year.
The obvious tech stocks that were trending throughout the year did extremely well after the U.S. stock market bottomed on March 23rd.
We’ve seen too many people confuse investing in these obvious trends with market skill or investing expertise.
The markets are not likely to repeat 2020.
So, in very simple terms, know how to keep money by living within your means, having a plan that includes a budget and your short-term and long-term savings goals, and investing in those goals utilizing a diversified portfolio appropriate to the timeline of your goals.