Saving money-no matter how hard you try, it seems that you’re never earning enough money to make it happen. You’re searching for a better job or hope to get a pay raise so that you can get out of the rat race.
But even when this happens it seems like it’s not enough. That’s not very surprising with the constant rise in prices for goods and services. You feel exhausted and disempowered.
Why does it have to be so difficult?
I bet you’ve struggled at some point in your life with money. You either didn’t earn enough or your spending was too high.
Maybe this even forced you to borrow money from your parents and friends.
But what if there is a solution? What if I tell you that some of the millionaires, work the same job as you do.
Sounds crazy, right?
Let’s first dive into the problem of why you aren’t able to save money.
The problem is that you’ve never learned the rules about money. You’ve been told that you just need a good job and from there life takes care of itself.
Soon after college, you find out that this isn’t the case at all. You’re working a bunch of hours that earns you enough to pay your rent and other necessities.
Not even to consider the massive amounts of debt that you got yourself into during college.
Welcome to the rat race.
Not only do you have to pay for your rent and food, there are also many other distractions. Newer gadgets are popping out of the ground like never before.
Of course, you’re very tempted to spend some of your savings on this.
You Don’t Invest In Yourself
The problem today isn’t that people don’t earn enough. The problem is that people still live with the 20th-century mindset.
If you finish college, you’ll get a good job. With a good job, you earn good money. Done deal.
Although this is a great idea if you were living in the late 20th-century, it’s not relevant today. If you stop learning after college, you fall behind the rest. If this is your mindset, you’re going to face a lot of difficulties in life.
To climb up the ladder in life you must invest in yourself.
You Don’t Save
You’re bombarded by advertising every day. It’s difficult to keep your money in your pocket when the newest iPhone hits the market. Or you see that awesome jacket of which you know, a picture with this will hit over 100 Facebook likes.
Besides, who cares about what’s going to happen in 20 years from now, right? Do you really have to care about saving for the future? And your retirement?
That’s still so far away, you’ll figure something out.
You Always Manage To Spend Every Single Penny
The problem isn’t that you’re not earning enough – the problem is that you’re spending too much.
I bet that if you get a pay rise, you’ll find a way to spend this money.
Allow me to explain this. If you’re in a higher income bracket, you’re more likely to have friends that also earn a higher income. As human beings, we’re always comparing ourselves to others. What for other people might be a luxury, is for you now a necessity.
Does that sound familiar?
The truth is that the more you earn, the more you spend. It’s in our human nature to seek for more.
This can be a good thing because you can use this as a driver to achieve the goals you set out for yourself.
But if you want to be in control of your money and your life, you must set some rules.
Don’t fall into the trap of telling yourself that you’re the exception. If you don’t build the habits of money management, you’re going to have difficulty to ever save up something.
Why Saving Money Is Important
Don’t you think that you would live a higher quality of life, knowing that you’ve got the ability to accumulate money and save money? Wouldn’t this increase your confidence in your personal finances?
Of course, it would!
What about the reserve that you’ve created to back you up when something unpredictable happens? Wouldn’t it be great if you don’t have to stress about your money?
Become Financially Secure
You’ve to save up money because you’ll get into a situation when you really need it.
The financial world is going up and down and it’s only time that stands between now and the next financial crisis. There are so many things that can happen that you don’t expect.
Of course, you shouldn’t live in fear, but you should prepare yourself financially but the downsides of life.
Whether it’s an economic crisis or just a personal one, wouldn’t it be great to have something to back you up? Let’s be honest with yourself, how would you do without a job for a year?
If you’ve something in the bank and you lose your job, your first problem isn’t to collect money for the upcoming rent. You’ve got that money and you know you’ll be able to pay the bills.
Instead, you can focus on getting another high-quality job. Or you can choose to start working on your own without too much pressure.
Obviously, it’s not the ideal scenario, but it’s much better than being jobless and broke.
Even if you don’t lose your job it’s smart to save up money. You can use this to invest in different assets. This allows you to build some wealth that produces you an extra stream of income.
You can build some wealth to give your children or use it for yourself when you hit the pension mark.
Become Financially Confident
Not only do you save up money, you also learn how to save up money. This by itself is a great habit to learn. Knowing that you’re able to save a percentage of your earned money, gives you a great boost in confidence.
But saving up money by itself isn’t going to help you. You’ve to learn how to invest your money to see some serious benefits.
This might seem hard in the beginning, but once you’ve learned the basics of investing, it’s going to pay off.
“The best investment you can make is in yourself. The more you learn, the more you earn”
– Warren Buffett
And the more you’re able to earn, the more confident you’ll become in your personal finances. Even if you would lose all your money today, you won’t lose the skills that you’ve learned throughout the process.
The skills that you build throughout life is going to determine how rich you feel. Everyone can win a lottery and have a lot of money. But it’s those who build wealth themselves, that gain the confidence to do it over again.
And after all, it’s the confidence in your ability to make money that makes you feel rich.
Many of people’s everyday problems are the result of a lack of money. Even a good percentage of divorces are the result of money problems. This by itself is a good reason to learn the rules of money.
Can You Get Rich Saving Money
The short answer, yes!
The long answer? It depends.
First, you must determine what rich means to you. You can feel rich right now if you wanted to.
You can definitely increase your earning and your wealth and therefore become richer over time.
The problem is that most people want to be rich right now. No one wants to put the work and effort into growing wealth anymore.
So you can easily become rich but …
Can You Become A Millionaire?
Yes, this is absolutely possible for you. But why would you want to become a millionaire?
There are many reasons why you should strive to become a millionaire. It’s not the money that’s important, it’s the characteristics that you develop throughout the process.
If you’re a millionaire you’ve got money and time to issue the problems that society is facing today. You can decide what you want to focus on.
You must change your perspective on money and be willing to learn the rules of money. The basic principles are very easy to understand and it’s achievable for everyone. You can use the law of attraction as a tool to get you faster towards your goals.
We’re not diving deeper into this here but you should aim to become a millionaire. It’s selfish not to try to become a millionaire. To become a millionaire, one must learn the art of providing as much value as possible.
Spending Versus Saving Money
There are 2 ways to keep more money at the end of the day. You either earn more or you spend less. Earning more and spending less are both great ways to save up money but for different reasons. If you’re just starting out you’ve to consider both of them.
The short-term solution is to spend less. This is a great way to start saving some money today but the amount of money that you can save has a limit.
The long-term solution is to earn more money. You may be able to start doing this today but it’s more likely that you’ve to upgrade your skill set first. The benefit is that there is always more to learn. It’s also more fun to earn more than to spend less.
The solution to the problem is to manage your money by looking at different brackets. These brackets should be a certain percentage relative to your income.
If your income is just enough to pay for the rent and food, you’re doing something wrong. You’re never going to save if you don’t keep a penny after paying the necessities.
You can solve this by moving to a place where the rent is cheaper. The other option is to switch to activities that generate a higher income. If you spend all your money on rent and food, you must change this immediately.
So what exactly would be a good goal to strive for? Do you’ve to save everything that you don’t spend? That doesn’t sound like a great plan either.
This would mean that you experience a low quality of life. You don’t want to save money, for the sake of saving money. You must enjoy some of your money, to make life enjoyable.
That sounds quite controversial, but let’s have a look at the allocations.
Before you split your income, you need to know where you’re going to spend your income. Let’s see what categories are important in your life.
- You need a roof over your head
- You need food to feed yourself and your family
- You need other necessities, such as insurance and medication
- You need to save money
- You need to have fun
- You need to improve yourself
These are roughly the areas where you need to spend your money. The first 3 areas are the necessities. It’s the easiest to save money in the bottom 3 categories.
The problem is that most people spend too much money on a house. Others only care about having fun. Improving ourselves and saving up money is most often neglected.
The Allocation Model
It’s great to have a structured plan, so let’s dive into this straight away.
- 55%- for living
- 10%+ for fun
- 10%+ for saving
- 10%+ for self-growth
Feel free to play around with the numbers. It may change depending on how much you earn. If you’re currently earning the average income or beyond, you should invest the majority of your income into yourself.
No matter what happens you must get into the habit of spending 10% on fun, self-growth, and investments. This guarantees you to gain momentum in your life. You learn all the necessary skill along the way that you need to succeed.
55% For Living
If you go slightly over this, don’t stress. But if you spend more than 70% of your income on necessities, you might want to reconsider your situation.
You’ve got the options to watch your expenditures on food and utilities. But this can be a dragging process. You can also choose to downsize to a smaller house. No this isn’t the fun part…
It’s always difficult to accept less than you’re used to. But sometimes it’s the necessary step for you to take to gain a higher quality of life.
10%+ For Fun
This is necessary because, without fun, you’re not going to enjoy the process. If you don’t enjoy the process, you’ll fall back into old patterns. This may result in a total crash and results in you spending all your savings to the last cent.
And hey, life should be fun! Loosen up a little and don’t be so hard on yourself. Yes, you’ve to make some tough decisions, but this doesn’t mean your whole life has to suffer from it.
10%+ For Savings
We’ve already discussed why this is important. What we haven’t discussed yet, is that saving is going to be something you’ve to learn. Because if you want to save successfully, you’ve to learn how to invest.
If you’re starting out on the journey of wealth creation, invest the majority of your money into yourself. But it’s a good idea to start developing the habit of putting money aside for other investments.
Today, it’s easier than ever to invest. There’s plenty of information online about investing. Don’t become obsessed with earning money from your investments. In the beginning, it’s the learning process that’s important.
10%+ For Self-Growth
This is the most important category of all. The more you spend into your self-growth, the better you become at whatever it’s that you do. Especially at the beginning of your life and career, you should make this category the main focus.
The more you spend into self-growth, the more you’re going to be able to earn. It’s needless to say that this increases the income in every category.
Tips For Saving Money
You don’t want to live a life where you’ve to calculate every dollar that you spend. This is a life where you’ll make poor decisions and you’ll eventually pay this with more money or even worse, your health.
Instead, look at your major costs and reduce these. Are you living in a house that’s too expensive for you? Are eating outside too often? Do you spend too much on holidays?
The only way you’ll figure out is by keeping track of where your money goes to. Take a sheet and create 2 columns. On one side you write all the money coming in and on the other side everything that goes out.
If you’re looking for some tools, check out this article on the HuffingtonPost.
Do you see something that surprises you?
A Critical Self-Evaluation
To get your finances under control, you must have a critical look at the way you spend your money. If you neglect this nothing is going to change.
Take 100% responsibility for your life and your finances, regardless of who’s fault it is. Take control back over your life and decide today that you’re going to change this!
Think about how your life would be if you would’ve money saved up. How would you feel? What would this mean for all the people that depend on you?
No matter how hard you try, you can’t save up money. The problem isn’t that you’re not earning enough. The problem is that you haven’t figured out how to spend your money. You don’t save money or invest it in yourself. Rather you spend everything on your necessities and activities you do for fun.
You’ve to change your mindset about saving money. Not only will you become financially secure, you’ll also gain the skills necessary to gain the confidence you need. With this, you still feel secure when the next financial crisis hits.
The key to creating wealth it to learn how to spend your income. You should spend your income with the following structure:
- 55%- for living
- 10%+ for fun
- 10%+ for saving
- 10%+ for self-growth
In the beginning, the most important investment is going to be in yourself. Only when you grow as a person, your income can grow with it. Keep in mind that building wealth isn’t so much about the money itself.
Wealth itself is great for the feeling of security. But even more important, the process of creating wealth builds some great characteristics.
And becoming a better person is priceless.