Most of us spend long hours every week working hard because we all dream of having a bank account filled with at least a million dollars or simply winning the lottery. With so many of our goals being labeled impossible, it’s important to note that among the supposedly futile goals we set and forget, some of them are actually within our grasp.
Having a million in your bank account is more about smart planning and savings. That means you do not need to have the latest tech device or buy everything designer-made. Here is the advice on how to be rich from the experts.
According to financial adviser and author of Couples Finish Rich, David Bach, people need to know one thing. Pay yourselves first and foremost. He is speaking from experience since he made his first million by the time he was 30 years old. It does not have to be a lot of money either. Most 20-year-olds are not making over $100,000 so starting with as little as $2/day is enough to get you there.
For some, it may mean giving up the daily fancy coffee or the beers.
If you can do more, by all means do it. Bach admits their magic number is 20. “Today, my wife, Michelle, and I each strive to pay ourselves the first 20% of our gross income,” he says.
You should also talk about finances with your partner. “Smart couples talk about money all the time,” Bach reveals. “When you work together on your finances, you can compound the results. When you don’t, the same can be said for the mistakes you will invariably make.”
Thomas J. Stanley, PhD, and William D. Danko, authors of Millionaire Next Door say saving is not enough. Investing your hard earned money to see it multiply and give you returns is key but deciding what you are going to invest in can be a daunting task. You need to be willing to give up certain things that are really just luxuries. It does take adjusting to this lifestyle but think of the light at the end of the tunnel.
The best-selling author recommends you write your goals down.
“Make your goals specific, detailed, and with a finish line,” he recommends.
“People who write down their financial goals get rich. It’s a fact. Study after study has shown that writing down your goals makes it much more likely that you’ll achieve them,” Bach reveals.
A high percentage to put aside may seem too much at first. Bach says it’s ok to start with baby steps, even it’s just 1%. “And that will put you on a path that ultimately will make you rich.
“Remember, you won’t be a millionaire overnight. It literally takes time, patience, saving, saving, and more saving.”
The Millionaire Next Door authors noticed something in the wealthy who didn’t inherit their money. They live in modest homes, are thrifty, don’t indulge their kids with ridiculous expenses, and don’t drive luxury cars. They says the average millionaire only spends 10% more than the average American on a new vehicle.
Stanley and Danko found one-third of the wealthy buy used cars. This may mirror studies based on what makes people happy. It’s not material possessions but rather doing things with family and friends. Going to a dream vacation with your loved one may help you achieve this joy. But that’s only if you pay it cash instead of raking up your credit card.
Another option is getting a part-time job to be used for saving, travelling, or both. “If the two of you don’t make your finances a priority, they won’t be one,” Bach concludes.