8 Smart Ideas To Save Your First Million Dollars
The first million might no longer mean what it used to – after all it won’t buy you an island or a yacht any more – it is still a good goal to aim for and besides, if a million is not enough, a good big step on the ladder to true wealth.
It’s just a matter of having discipline and understanding some of the fundamentals of money. So let’s explore those, shall we?
1. Get Help Paying For Stuff
Planning to go to a university? Get a scholarship. Want to buy a house? Get help from the government. Whatever you do, make certain you shop around and find ways to help assist. You’ll be surprised with how much a little letter writing can save you. All you need is an effective marketing campaign.
2. A Dollar Saved Is A Dollar Earned
Earn more by spending less. If you spend $5 per working day on snacks and coffee, that means you’re throwing away $100 a month, $1200 in a year and $96,000 over your average lifetime. Now imagine if you would have invested that instead?
3. Do You Really Need The Nice Car?
What’s more important, saving a million dollars or having a really nice car? Because you probably can’t have them both. The same goes for the house, the clothes and the phone. Don’t buy what you can just afford. Instead buy what you can afford easily. And slow down your replacement rate as well. You don’t need to buy a phone every year. Wait until it really doesn’t work for you anymore and that’s a lot of extra money in the bank.
4. Compound Interest Is Your Friend
The moment you can, start putting money into a saving plan or investment portfolio that earns you compound interest. Also, make certain you shop around to get the best deal. One percent of difference might not sound like a lot, but it can be massive.
For example, if you get a measly 2 percent interest it will take you 35 years to double your money. If it’s 3 percent? Then it will take you only 23.5.
That means in 50 years that coffee money from #1 would be worth $400,000 dollars. Who’d ever have thought coffee costs so much? Check out the Rule of 72 to know more about how much difference a little interest increase makes.
5. Take Advantage Of Employee Retirement Accounts
In many countries, if you save for retirement, your company will match some of what you put away. That’s free money and if you want to make your way to a million bucks, there is no way you can leave that lying around untaken – just because it’s in a retirement fund, doesn’t mean it’s not real money.
6. Invest In Small Increments
Don’t wait until you’ve got a nice big sum of money to invest. That might never happen (or you might have to use it for something else when you do have it). Instead, invest incrementally – a small amount every month.
A great way to do it is when you get a raise. Automate it so that half of that gets put in an investment plan. If you do that every time, you’ll have a nice bit of cash in there in no time.
7. Don’t Be Afraid To Ask For A Raise
If you’re doing good work, then make sure you get paid for it. Often we can get more than we earn if we just have the nerve to say to our bosses that we deserve it. And that can make a world of difference to your bottom line – especially if you immediately make sure that it doesn’t go to your bank account but into your savings instead.
8. Stay On Track
Followed all that advice? Great, now all you have to do is stay on target, don’t splurge and try to avoid lending money to your Cousin Tommy. If you can do all that you’ll be swimming in it in no time and then the question will become: how long will it take me to make two million?