This simple savings rule will help you accumulate wealth
You can grow your wealth if you exercise discipline and stay consistent.
by: Kelly Campbell
Years ago, I had a great friend who I considered truly wealthy. He had it all: a nice home, a great family, wonderful friends and there wasn’t much he couldn’t buy. He seemed to have his act together, so much so that I asked him how he did it. How did he seem to have it all, while most people in the world were living paycheck to paycheck? His response was somewhat expected, but he explained it in a way that made it sound easy. He said it was two things: discipline and consistency. And then he went into detail.
He told me it was not about starving yourself or going without for months on end. Rather, he said it was about doing the simple things, but doing them consistently. Going into further detail, he explained the three things I have adopted for many years, and they have had a significant impact on my life.
First, he said that whenever you get a raise, don’t spend it. If you are making a certain amount of money and used to a certain take-home pay, wait until you get a raise and the money in your paycheck rises, and always invest that amount.
Unfortunately, most people simply take that new amount and find another way to spend it, such as buying a car, going to Starbucks more often or taking more vacations. His goal was to keep his life the same and simply invest the difference.
Let me give you an example. If you are making the average American salary of approximately $63,000 per year and you get a 10 percent raise (which I realize is high), that will give you about $400 more per month in your paycheck after a 20 percent tax (state and federal). By the end of the year, you will have an extra $5,000. The simple secret to becoming wealthy is to take that $5,000 and invest it each year. Think about it. You did not have the $5,000 before the raise and you were getting by. Do you really need it now? Could you put it away for later?continue reading »