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I've made a small webpage regarding the same topic, but I think it'd be a good idea to cover it here as well.

TL;DR: money and fire compound, both take time to build a solid foundation, takes skill to master, and can be a great tool and a terrible weapon.

Money is analogous to something that grows exponentially, if you're a biologist, you may find it's more similar to bacterial growth, if you're into signal processing, you may find it's similar to oscillations with varying dampening placed on it. However, I am going to focus on fire among all other analogies, as I believe more people are familiar with it than with the others.

So what makes fire such a good analogy? If you've ever attempted to start a fire from scratch using nothing but your bare hands and the world around you, you know it's not an easy task, especially if all you're familiar with is "try rubbing some sticks together." It's easy to get warm wood by doing that, in the same way it's easy to mow your neighbor's lawn or walk their dog for $10 or $20.

Perhaps your parents have a lot of money, and so it's easy for them to give you an allowance, simply handing you a couple of hand warmers every week or two doesn't even phase them a bit.

Maybe your parents didn't or don't have a lot of money, so trying to build something without the right materials can be extremely difficult. Add in some racism or sexism, and that's similar to having someone tie one hand behind your back.

Getting into debt that you can't pay off is like pouring water all over your kindling.

Varying your investments is like gathering different types of things to burn. You can't start off buying $500k houses or throwing big sticks on your fire if all you have are a handful of stocks or some twigs lit. You need to build up to that point.

Collection of those assets require different methods too. You don't collect sticks in the same way that you'd collect logs - the two are fundamentally different.

On the flip side, and far fewer people tend to run into this problem, but it really shouldn't be ignored is what happens if/when you have too much money? you've gotten your twigs, sticks and logs on fire nicely glowing, but now you've added brush from fallen trees, you've thrown on some big oak branches, and maybe a shrub or two, and now it's starting to get out of control, catching the living trees on fire and the grass around it. Now your investment isn't working for you, it's working against you.

There are a number of ways to mitigate how far the fire can spread; pour water around the edge, selling stuff you already have, give others your flames to spread wealth to those who need it, or even disassemble it altogether, disperse your funds and live on the streets.

But perhaps the thing I see my peers struggle with the most is making good choices when choosing what to invest in. I see investments in alcohol, in luxuries such as nice cars or smarthpones, in useless things like television, and blowing away their most important asset - time.

The saying that time is money is pertinent because both are limited (although arguably time moreso than money), and so should be spent wisely.

Generally, the term for this is a budget. The Horror. Fear not, for a budget is nothing more than taking stock of what you have, what you don't have, what you will have, and what you won't have, then making a plan on where you want to be.

For instance, I have a hand warmer and live in the woods - I have ~$10 to my name and live in a place where opportunity is ripe. I want to have a decent fire that won't go out easily that I can cook my food on and not fear the night - I want ~$1M to my name so I can retire comfortably in a decent house with good food and friends.

So we have where we are, and we have where we want to be, so now we just need the fun part - the plan on how to get there.

Well, we know how to build a fire now, so let's gather our supplies our investments. That hand warmer won't do us much good - walking the dogs can only take you so far, but it can help keep you warm while scouting for other investments. It's time to find something more useful like tinder supplies and some sticks to rub together. Now you've got a solid base to build on with your part time job.

Next let's grind up a work ethic by rubbing those sticks. Elbow grease is the best way to get anything done. After a little bit (if you're lucky, not long, if your conditions suck, then it'll be longer), then we've got enough heat for a coal. That coal is your best friend right now. A colloquial term for this is a nest-egg.

Now our fire isn't even started yet, but it feels pretty good to start smelling that burning wood, to have invested in a car or something smaller. The issue is that if left alone, the spark will die - the car will rust, and we're back to square one.

So now you've grown a bit and have a full-time job. Suddenly your pay gets better and you've transferred the coal to your tinder bundle, now small flames and smoke whisps come around.

We could stay here, and not die easily now. it's a trivial matter of placing some small sticks, or maybe even larger ones on that bundle and just keep doing that for 40 years until you retire at 65 or 75 and keep working part time. It's tempting because it's easy. But dammit, we're better than that.

So let's throw on those little sticks and buy some stocks and open a retirement account. Let's throw some bigger sticks on there and maybe start a small business. If it works, great, if not, you haven't gotten too far, so there's not much to lose that you can't do it over again fairly easily.

Those seemed to have caught well, so now let's move to bigger investments. You can get a better place to live, maybe buying a house or picking up a second job. getting the house will set you back, just like throwing a large log on your small fire will nearly douse it, but by adding sticks from your part time job, the big stick pays off well. Your fire is big enough to have food made easily now, and maybe you have a friend come by who helps you throw sticks on.

You've reached lower middle class. Perfectly sustainable, fairly comfortable, a house, a partner, good food, good friends, maybe kids. Life really isn't bad. No one will judge you if you stop here, many do, and there's nothing wrong with it.

But we can still do better. It's time to reflect on our goal to "have a decent fire that won't go out easily that I can cook my food on and not fear the night." A modest goal, but if my friend or I leave, will the fire go out? If it rains, will the fire go out? If someone comes by and kicks my fire, will it be alright? What if I break my leg and can't feed the fire?

Let's bulletproof what we have, and that will put us in the upper middle class. We can spend more of our own time building the fire, we can collect more twigs by picking up a second job, but maybe our skills are better spent picking up better investments like more real estate, better paying jobs or whatnot. The goal is to have the fire self sustain and grow at a controllable rate so that no matter what happens, it will be okay. We've got logs on the fire now, and nothing that happens now will stop it from burning easily.

Mission accomplished - finally.

but we can still go farther if you want. I'm going to anyways.

We've got a solid, low risk environment now. We can get comfortable and stay where we are, but that's boring. So let's just see how big we can get this thing before getting in trouble.

First, let's just keep adding logs. I've got enough fire to buy some more houses and condos that I can rent out, so why not? I'll throw those sticks on, and keep looking for more.

A couple of guys tell me they found some really nice trees - birch and sugar maple, top of the line. They don't have enough fire, so they'd like some of mine to get it going. I say sure, as long as I get 15% back on whatever they have.

My pile is now a bit smaller, but in a little bit, they come back with bundles of logs and suddenly my fire is bigger than ever! I never could have done that without having a large fire to begin with. Start-ups really help the investor too.

So now I've got others looking to get some of my fire, and I can just keep buying real estate, helping those start-ups, and now my fire runs itself.

Here's the thing though, I've got the rangers telling my it's too big, and to tone it down. I should listen, but I really, really like having this fire be big. Think of all the people I'm helping anyways with their constructions, and all the tools the fire helps me build, I wouldn't want that to go away, right? So I give the rangers some fire and say, "hey, keep this, give it to your friends, tell them it's from me. there's plenty more to keep you guys warm if you want." He sees the big log I'm giving him, and thinks of sharing steaks and burgers with his buddies.

"It's too much work to see what kinds of wood you've got in there, so I'll let you go this time, but I'll be back tomorrow," he says, but that's the fifth time he's said that.