Do you ever feel like no matter how hard you work or how much money you make, your bank account just doesn’t seem to reflect that?
Do you have a decent job and income, yet you still find yourself struggling to pay your bills?
Too often people have poor money habits that constantly provide them with money struggles. However, this can be changed or better yet, prevented.
The most basic yet most important advice anyone could give you on the subject of money is to save a certain portion of your income, invest, and let this balance accumulate. This is not a get rich quick method. This is the guaranteed how to get rich slowly method. You will be contributing a set amount of money each month while earning interest on the principle allowing for your wealth to grow exponentially!
You may make the excuse of “Well, I can’t contribute enough for it to be worthwhile” or “I’ll start saving when I make more money”. This will always leave you broke and just barely scraping by.
Trust me, this is no way to live.
The simple solution is to start small and be consistent. I recommend saving and investing 10% of your income. If you are currently living paycheck to paycheck, this may seem like a lot. If this is more than you can handle then start even smaller. $100, $50, $20 per month…. The important thing is to just start.
Most people pay more than $100 on their cable bill! So to not make a contribution toward your financial future is to say that you care more about watching TV then to be financially secure.
Just the fact that you are reading this, tells me that you have greater priorities than this. Now I’m not saying to you have to cancel your cable, but the point is that if it is important enough to you, you will find a way to set aside a small amount of money each month to invest.
Once you put this system in place, it will become automatic. You won’t even have to think about it. If you have the option of contributing to a 401K, that is fantastic! If not, you can still set up an auto-pay into a savings or investment account that is automatic.
Then the real excitement starts to occur. You may only be contributing a small amount, but over time and with interest the power of compounding takes over and you will amount a fortune far beyond what you could have ever imagined.
Just to give you an idea of how much money you will be gaining, here is a little exercise using a conservative $100 per month investment and a 10% annual growth rate compounded annually, which is quite reasonable based on historical stock market returns:
Investment after 1 year = $1,264.05
Investment after 2 years = $2,654.51
Investment after 3 years = $4,184.02
Investment after 4 years = $5,866.47
Investment after 5 years = $7,717.17
10 years = $20,145.76
20 years = $72,398.67
30 years = $207,929.27
40 years = $559,460.74
Therefore, if an 18 year old kid started saving just $100 a month, invested and never touched it he or she would have over half a million dollars by age 58!
And this is assuming no increase in contribution! Realistically this same person could contribute much more than the $100, especially as they get older and earn a more substantial income.
However, even with a modest income of $40,000 per year, investing 10%, compounded over that same timeframe would equate to $1,864,850.49!
Who would have thought that your 58 year-old neighbor with a typical job and modest income could be a millionaire!
There are all kinds of scenarios, and I find myself getting carried away when playing with different timeframes and interest rates. But that is the exciting part.
The point is that it doesn’t matter how much you start to save or how old you currently are. All that matters is that you start! Because, down the road you will be much happier that you did.