Don’t fall into the trap that many people do once they start budgeting: using that “extra money” for more stuff. Once you have identified places in your budget to save and start socking it away, it’s time to invest it wisely. Or, maybe you have something you do for fun (like crafting, photography or writing) that you can turn into a freelance or side job. For example, look at higher-paying jobs in your field. Everyone has extra expenses that can be trimmed back.įor those who have already cut back on expenses, look at increasing your income. Maybe you can eat out less often, cut back your phone or TV service or even travel less frequently. Focus on those services or items you don’t really need, and try to cut some of them out of your life. You may be surprised to see where a lot of your money goes. Sit down and figure out exactly how much you’re spending and how much you are saving. This is where that ugly word “budgeting” comes into play. So, where do we begin to start building wealth? Step 1: Increase The Difference Between Your Income and Expenses In a recent survey, nearly 62 percent of Americans have less than $1,000 in a savings account. “But I can’t save $3,500 a month.” You’re not alone. However, saving $3,500 a month at the same interest rate for the same amount of time will lead to more than $1.2 million in the end. You can see that saving $250 each month at 4 percent interest for 25 years will lead to $88,000. The chart Alden published shows how much a change in the amount of savings and interest rates can affect the speed and amount of wealth growth. When we increase our savings over time and combine that with higher savings or investment interest rates over time, our total money grows higher and faster. How your savings get compounded over the years is what makes the biggest difference.Ĭompound growth is also known as exponential growth. This wealth building is accomplished through a combination of adjusting your spending and then saving what you don’t spend. ![]() The Concept Of Wealth BuildingĪlden’s major points in her financial plan focus on building wealth. Financial blogger Lyn Alden shared some tips and a helpful chart as a visual for how to make these big goals seem a bit more manageable. Still, saving can be a difficult concept for many of us. So, it’s important to plan for the unexpected. On average, a healthy couple can spend nearly $400,000 in healthcare alone. The three main areas these retirement savings will go to are healthcare, living expenses and lifestyle. While this question may be different for everyone depending on their needs, financial experts’ guidelines show we should put at least 10 percent of our earnings toward the future. An investment blogger has outlined a way to save $1 million or more. But if having that kind of financial security seems more like a fantasy than a possible reality, we’ve got some good news for you. ![]() Everyone likes to imagine what it might be like to be a millionaire.
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