|Mark O. Haroldsen’s BLOG|
Last week I wrote about the basic and beginning key to great wealth for those of us who start out with nothing, like I did. That key is ‘savings’. A couple days after I posted last week’s blog I saw a great summary on ways to save money in the USA Weekend Publication. Its suggestions included things like buying a used car rather than a new car, always shop for better bargains, set spending goals and budgets, refinance your house at today’s lower interest rates and more. These are things I’ve always preached. It comes down to buying only what you need vs. what you want and mistake for things you need.
It might be easier to put away that savings if you take a look at the huge potential in that 10% you are putting aside. I know it seems simple to put aside 10% but for most people it’s not that easy. In my book The Next Step to Waking Up the Financial Genius Inside You I talk about how to save that 10%. Many years ago when I was making a starvation wage of $600 dollars a month, I was faithfully saving $60 dollars each and every month and then when I got a $40 dollar raise I decided to add the entire raise to the $60 dollars–so I was saving $100 dollars out of $640 or 15.6% of my monthly income. Yes it hurt sometimes because I had to go without things I wanted, but was it ever worth it in the long run.
You would do all of this if you truly wanted to be very wealthy rather than just being like everyone else who lives paycheck to paycheck. But now let me reveal to you a little fact that may entice you, shock you, and motivate you to do the ‘savings thing’.
Back when I wrote the third chapter entitled “Action Two, Saving the Magic 10 Percent” I had a friend who was paying a 10% tithing to his church and when I pointed out to him what he was really giving up he was shocked to the core. Please don’t get me wrong. I am not against charity but the thing is, if you want to be independently wealthy, you must pay yourself first. What I told him was that If you start at age 25 saving 10% of your wage, and assuming you only make $30,000 dollars a year and (get this … you stop saving at age 30) you will have over 7 million dollars when you hit age 70! And believe me, that big 70 comes much faster than you think!
Granted those numbers all depend on you investing your savings with an annual compounded return of 15% but wait before you jump to conclusions and think 15% is unrealistic and can’t be done, because it can. If you work harder and find the right deals you could even push that rate of return up to 20% which would be an astounding 47 million dollars by age 70. Amazing, isn’t it? Next week I will show you exactly how to do that. I’ve gone over this before but its well worth repeating.
Previously on Mark O. Haroldsen's Blog