The secret to getting rich is actually quite simple.
First of all, you have to spend less than you earn. Then you must invest the difference.
But don’t stop there: you then need to reinvest the earnings that your initial investment generated, as well as the original investment. Over time, this will create a large enough resource for you to live comfortably on the income your investments generate.
Does this sound a bit scary or like too much hard work? Well, don’t worry because all you need to do is create some saving and investing strategies and the rest will fall into place.
The first step is to create a savings plan that works for you. When it comes to saving money, there are generally two different types of people.
The first type are people who can somehow save money without great difficulty. They have good restraint when it comes to shopping and always have a sock full of money somewhere. When ordered and given strict rules to abide by, they tend to want to rebel and do the opposite.
The second type of person needs strict rules and regulations to achieve most things. Left to their own devices, they would happily spend all their extra money on a new pair of jeans or a car. When these people are given clear rules, they seem to be able to save money much more successfully.
What kind of person you are? Do you need strict savings and investment strategies to save money, or are you at your best when you have more freedom? To be completely honest, I think everyone could get better at saving money if they applied a few simple ideas.
One of the best savings and investment strategies I have found is this.
Reward-Based Savings System
The first step in this system is to create a savings plan. For example, you should focus on some areas of your life where you think you could save some money, eg.
bring your lunch from home
leave the tuxedo
Less alcohol from expensive bars
cook your own meals
public transport
cut back on snacks
Isn’t it infuriating how most of the things I just mentioned would benefit your life in more ways than just saving you money? The problem is that all of the above are actions and hobbies that you really enjoy.
So is it realistic to try to eliminate these activities from your life and expect to be happy just because you are saving some money?
No, I don’t think it is. How about every time you save money you just reward yourself? Then you could enjoy saving money instead of growing to feel it.
For example, if you quit smoking, I suggest you keep track of the money you’re saving and use some of it to reward yourself with something you love but don’t normally get, like a massage. Or a night at the movies. In this way, you are creating a savings plan that will actually work. Because? Because you want it to work so you can get your rewards. Too many people create savings and investment strategies that don’t have reward systems built into them. The best thing about a rewards-based savings system is that you really enjoy the feeling of saving money. So if you are smart enough to invest the extra money you are saving, you will have started your journey to financial freedom.