It may not be a get-rich-quick scheme, but a financial advisor has recommended this simple method to becoming a millionaire.
Let’s call it that, nobody really wants to budget.
But we want more money, and more than that, the epic lifestyle that more money can buy. Unfortunately, it is not easy …
Our internal economizer is wired for failure. Anytime you spend money on something, whether it’s a new tech toy or a lunch with your friends, you get immediate pleasure.
The alternative is to put some money aside for a potentially unknown future date.
At the time, he made the choice to spend his money instead of saving it easily.
But the point is, how much you save is the biggest factor in how quickly you make money. It is also what makes the difference between true financial success and financial mediocrity. And, unless you were born with a lot of money (and probably even then too), you have to become good at saving and spending at some point in your life.
Created by financial advisor Ben Nash, Cashed Up is a free six-week course to help Australians take control of their finances. Those who sign up for the Budget Bootcamp are given weekly, step-by-step challenges to improve their financial health.
By the end of the six weeks, participants will have budgeted, created a savings plan, learned to invest and paid their retirement pensions. The interactive course can be started at any time and aims to empower participants to make more informed financial decisions.
How to turn $ 53 into $ 1 million
I want to illustrate with an example. In this example, you find a way to save $ 53 each week, then invest in the Australian Stock Index (what you see on the news at night saying the “market” is up 1% etc).
You continue this over time, saving weekly and then reinvesting your dividends as they are received, allowing your investments to grow through the power of compound interest.
The power of time and money is a beautiful thing.
Based on the long-term Australian equity market return of 8.8%, your $ 53 per week would increase to $ 43,945 in 10 years, $ 149,552 in 20, $ 403,343 in 30 and ultimately $ 1,013,246 in 40 years, making you a millionaire. All for less than the price of a few almond milk lattes each day.
It should be noted that $ 53 is not nothing, and for some people it may be difficult or impossible to do depending on their current situation. But on the other hand, $ 53 is only 4.01% of Australia’s current average income of $ 90,329, which means that should be pretty achievable for most.
But as I mentioned, saving is not easy. And for most people, it doesn’t come naturally. But it is achievable if you know how to approach your savings strategy.
After helping thousands of people, I have discovered that there are a few key things that contribute to successful savings. The elements are: a 50,000-foot view, good prioritization, as well as segregation and automation.
Prioritization is at the heart of a good savings strategy. We all have priorities: spending on our daily lifestyle, living in a beautiful home, traveling or providing for family and loved ones, and saving enough money to create financial security, to name but a few. only a few.
Everyone’s priorities are different and there is no one-size-fits-all approach here – the perfect savings strategy for you depends on your priorities. But most people don’t consciously choose their priorities. They just “do stuff” with their money and then get the results they get.
View at 50,000 feet
The first element of successful savings is having a high level 50,000 foot view of the flow of your money. What income you have that goes in, what goes out and what is left. To make it easier for you, you can use the Cashed Up calculator to do this.
You should list everything, then dig deep and review the things that you have prioritized, making sure that overall you get the most happiness from the things that you have prioritized.
Automate your savings
Once you have set your spending and savings allowances to deliver maximum happiness based on what is most important to you, you need a system that will turn your savings plans into results. saving.
Here you want to automate your savings strategy to make it easier to manage your money.
Everyone’s situation is a little different and at the end of the day you have to find an approach that works for you, but you definitely need some sort of system if you want to make it easy.
Multiple bank accounts
I have found that using multiple bank accounts, direct deposit, and different banks for your day-to-day spending against your savings is very effective in automating your savings success and growing faster.
Don’t get too hung up on the details here, you just need a place to start. Once you get started, it’s much easier to correct and refine your approach over time, bringing you closer and closer to your version of financial success.
It won’t happen on its own, you have to take action. The first step is always the hardest, but once you’ve taken that, you can build on the momentum you create to make your next steps easier.
If you want to make your first step easier, check out news.com.au’s six-week Free Cashed Up Challenge – where you’ll get my top tips and tricks to help you save more money, then figure out some smart things to do. with the extra money you have to work with.
Ben Nash is a financial expert, commentator, podcaster, financial advisor, founder of Rotate wealth and author of Amazon’s bestseller Get Unstuck: Your Guide to Creating a Life Unlimited by Money.
Disclaimer: The information in this article is general in nature and does not take into account your personal goals, financial situation or needs. Therefore, you should determine whether the information is appropriate for your situation before acting on it and, if so, seek the advice of a financial professional.