If you want to be rich without paying too much, just learn how to save and invest at an early age!
Here are strategies to help a person who could become rich even with a modest and steady salary.
Author Robert Kiyosaki once said in the book name Rich Dad Poor Dad: “Most people don’t realize that it’s not how much money you make, but how much you keep.”. Some advice below will help a person who has a modest salary becomes rich.
1. Invest at an early age
When you are young and start to build a career, the sooner you focus on investing, the less money you need to save every month later. You should borrow the power of compound interest to quickly achieve your goals.
It is supposed that an average annual investment return is 6%. If you started investing at age 23, you would only have to save about $14 a day to become a millionaire at age 67. Meanwhile, if you were at age 35, you would have to save $30/day to become a dollar millionaire by age 67.
If you invest early, you can even create a fortune worth millions of dollars based on a modest salary.
2. Making regular investments
In five years, Grant Sabatier, author of Financial Freedom and owner of Millennial Money, went from having just $2.26 in his bank account to $1 million. The 31-year-old self-made millionaire revealed that one of the most important secrets which he uses to build wealth is to regularly put money into an investment account.
Grant Sabatier starts with a goal of $50 per day. In the beginning, although there were days when only 5 USD was spent, Sabatier did not miss a single day.
The original goal of 50 USD/day has now turned into 70 USD, then 80 USD and then 100 USD per day. “Then, when my financial situation improved, I started saving more than 500 USD a day,” Sabatier said.
Now, even though he become a self-made millionaire, Grant Sabatier still maintains the habit of putting in an investment account of at least 200 USD/day.
3. Automate your finances
Once you’ve committed to investing, the easiest way to maintain that commitment is to automate your finances. It means that you should set up a process so that when you receive your salary, a fixed amount will be automatically transferred to your investment account.
This is an effective way that self-made millionaire Chris Reining has applied. Reining is the person who made more than 1 million USD at the age of 35 and decided to retire at the age of 37. Chris Reining describes financial automation as “The one tiny habit that leads to wealth”.
In addition, this approach also saves your time and energy. “I automated my money years ago, and the benefit is that I don’t have to think about where to put my money, how much to invest, …”, Reining shared.
4. Cut-off three biggest expenses
Anonymous said, in fact, he does not earn a salary of hundreds or thousands of dollars. He was able to save so much money because he focused on three main expenses: housing, transportation, and food.
Americans spend 70% of their annual income on three costs of housing, transportation and food. “So if you can decrease these expenses, you’ll save a lot of money,” Sean said.
However, don’t just focus on saving money. Self-made millionaire Grant Cardone, who was deeply in debt before becoming a millionaire, said: “Investing is the way to become super-rich. The only reason to save money is to invest.”
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5. Create multiple sources of income
Many self-made millionaires agree: If you want to make a lot of money, you can’t be satisfied with just one source of income.
“You can’t get rich if you don’t have multiple sources of income,” said millionaire Cardone.
There are many ways to create multiple sources of income. For example: doing something extra in your spare time or creating a passive income…
6. Create specific goals and do the math
If you want to build wealth, you must have a clear goal, a specific plan, and a certain deadline. Millionaire Cardone suggests we should do a lot of math with numbers to figure out what we really need to do to achieve our goal of becoming a millionaire.
“To reach any goal, you have to believe it’s an achievable goal. The way to do that is to do the math. Then you’ll know how many can be applied to own one million USD”.