1. Set a tight budget and commit
In order to save/invest responsibly, we need to know how much we're spending. To do this, simply set a budget for your monthly spending and stick to that like your life depended on it. When deciding on how much to spend each month, take into account your bills, daily necessities and meals. After accounting for all that, the rest of your money should go into saving and investing.
Because bills and other monthly expenditure should be pretty much the same each month(I will mention more about meals later in this article), your spending should never vary from month to month. This means whether your income increases or decreases, your spending should remain exactly the same each month.
Because bills and other monthly expenditure should be pretty much the same each month(I will mention more about meals later in this article), your spending should never vary from month to month. This means whether your income increases or decreases, your spending should remain exactly the same each month.
Having a fixed amount spent each month means that every additional dollar earned will be saved/invested. This adds up over time and will snowball into much more money than you may realize!
2. Don't spoil yourself
In my previous article, I mentioned the 'Don't be an idiot' rule, which states that every dollar spent is a dollar further away from making you a millionaire. Fight the urge to get that new game/shoe/phone that everyone's buzzing about and force yourself to save that money instead.
This doesn't just apply to new and fancy items! Even buying yourself some extra desert, or eating out at an expensive restaurant every week is spoiling yourself. An additional $10-$20 spent each week or each day doesn't seem like much but it adds up surprisingly quickly!
A general rule of thumb would be to ask yourself, 'Do I really need this?', or 'Will this bring me any financial returns in the future?'. If it doesn't, you're probably better off without it.
Since your spending remains constant each month, every additional dollar you make will translate to more money saved/invested. Because of this, we want to work towards getting the amount of money we invest each month to $4,800 which is what we calculated to be the average amount needed to be invested in the S&P 500 each month for the next 10 years to achieve a 2 comma status.
Once you've got a stable income, look for some more ways to increase your income. Here are some off the top of my head!
This doesn't just apply to new and fancy items! Even buying yourself some extra desert, or eating out at an expensive restaurant every week is spoiling yourself. An additional $10-$20 spent each week or each day doesn't seem like much but it adds up surprisingly quickly!
A general rule of thumb would be to ask yourself, 'Do I really need this?', or 'Will this bring me any financial returns in the future?'. If it doesn't, you're probably better off without it.
3. Increase your income
Now that you've set aside a specific amount which you can spend each month, let's work towards increasing how much you can save/invest.
Since your spending remains constant each month, every additional dollar you make will translate to more money saved/invested. Because of this, we want to work towards getting the amount of money we invest each month to $4,800 which is what we calculated to be the average amount needed to be invested in the S&P 500 each month for the next 10 years to achieve a 2 comma status.
Once you've got a stable income, look for some more ways to increase your income. Here are some off the top of my head!
- Starting a business
Invest some of your money to create a business which will bring you significant returns on your investment! Do note, however, that a whopping 70% of businesses fail, but that shouldn't stop you from executing your million dollar idea!- Stating a side hustle
This could be as simple as mowing the lawn or starting a dog walking/baby sitting business on the side. You could also try freelancing on websites like fiverr.com, upwork.com or freelancer.com. These websites allow you to sell your services to people who are already looking for the skillset which you possess!
- Working multiple jobs
We understand that working one job is tiring enough, but when you want to become a millionaire, you ave to constantly be on that grind! Look for some part-time work to supplement your day job and you'll see the extra cash rolling into your bank account in no time!
- Getting multiple income streams
This is a tricky one. After getting some money to invest, look into some of the best ways to get ROI(Returns on Investment). Maybe look into buying some real estate, getting some rental from tenants to supplement your income, or stocks and REITs(Real Estate Investment Trusts) to earn some dividends with your money. When you start doing this, you are making tour money work for you instead of doing it the other way around, generating yourself some passive income!
I hope you've enjoyed this post and have picked up and learned something from it. I'm always looking to learn more and improve too, so feel free to drop me an email or comment on this blog and share some other things I may have failed to mention and I'll be sure to reply ASAP!
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