The Threshold Between Wealth Creation Destruction

The Threshold Between Wealth Creation Destruction



The Threshold between Wealth Creation & Destruction
Wealth is​ simply the​ accumulation of​ money, and​ it​ can only be created by the​ amount of​ money that is​ received and​ never spent .​
If you want to​ build wealth, then anytime you receive money: don’t spend all of​ it .​
Sure it​ is​ a​ very simple concept, but it​ is​ very difficult to​ continually achieve .​
Luckily there are readily available allies to​ help you: find some compelling reasons to​ start saving, build it​ into a​ habit, watch the​ results of​ your efforts build, and​ set some financial milestones to​ reward yourself.
Setting aside a​ percentage of​ any money that you receive is​ the​ best method to​ follow through and​ build the​ habit of​ saving money .​
There are a​ few misers among us who find saving easy to​ do, but most people want to​ spend far more than is​ earned; let alone have the​ discipline of​ spending less than what they earn .​
So it​ starts as​ an​ uphill mental and​ emotional battle that gets easier by following through with the​ habit, and​ seeing the​ results of​ your effort .​
Spending less than what you earn every week, every month, every year, is​ the​ only way to​ amass money.
How much money should you set aside to​ build up savings? It should be a​ percentage so that you automatically move it​ into a​ separate savings account anytime you receive income, without exception .​
It is​ my experience that the​ range of​ 3% to​ 10% is​ the​ most successful starting percentage for​ people who continue saving over long periods of​ time .​
Saving only 3% is​ so small that it​ is​ nearly painless to​ even the​ lowest income earners (this is​ actually where I​ began years ago) .​
Selecting a​ percentage under 3% accumulates to​ such a​ tiny amount of​ savings that I​ haven’t heard of​ anyone sticking with it .​
And starting out by setting aside over 10% is​ too painful for​ even high income earners to​ withstand, because they are so accustomed to​ spending on every whim .​
As you repeatedly save a​ set percentage rate, it​ will become more habitual, automatic and​ expected .​
Then you’ll be ready to​ increase your percentage rate .​
And the​ higher the​ savings rate, your growing pile of​ money will create more motivation to​ continue to​ save .​
This summer, I​ spoke with a​ successful saver who lives very well on only 30% of​ his income .​
Because he saved diligently to​ continually buy rental homes, after a​ couple decades he earns over a​ million a​ year in​ rental income by Ashville, North Carolina.
In the​ fragile first years of​ saving money, it​ can take only a​ single wrong financial move to​ wipe out everything that you’ve saved so far .​
And the​ most common wrong move doesn’t look like it​ when it​ is​ occurring .​
This draining move can also start insidiously small and​ build a​ different habit, the​ wealth-destruction habit .​
You know the​ problem: pay your credit card balance in​ its entirety, every month, without exception .​
As an​ example, if​ you haven’t saved money for​ a​ vacation before you depart, and​ then charge it​ all to​ your credit card, there is​ a​ giant probability that you won’t pay it​ off for​ a​ very long time .​
The credit card companies know this and​ they are extracting interest dollars from you instead of​ earning interest yourself .​
You’ve shifted to​ the​ dark side of​ wealth destruction where it​ is​ more common for​ your credit card balance to​ grow than shrink.
Let’s get back to​ building your wealth .​
Once you start setting aside the​ savings percentage that you’ve decided and​ opened a​ dedicated savings account, you need to​ closely review your account statements for​ motivation .​
Reviewing the​ progress that you’ve made so far you’ll see how you are moving toward financial goals can be self-reinforcing .​
And another motivator is​ rewarding yourself by spending some money on yourself when you’ve reached certain milestones .​
For example, you could start with a​ goal of​ accruing $500, and​ reward yourself with something meaningful; and​ then each time you double your amount of​ savings you get another reward .​
My advice is​ to​ at​ least begin with a​ savings percentage, even as​ small as​ my 3%, and​ allow this simple concept be of​ great financial benefit to​ you.




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