(Any Minimum Wage Earner can be a Millionaire)
Financial planning is critically important in any budget. Financial planning is not just for the rich who have the ability to hire an expert. Even a fast food worker needs a good financial plan in order to succeed in their golden years. They don’t need a financial planner to make that happen. This plan is simple and absolutely everyone can do this no matter how much they make, how much they owe or how old they are. Everyone needs to have a simple blueprint to follow and live their golden years with dignity. In this newsletter, you will learn the 5 key components of a good financial planning strategy. You will learn that it doesn’t take a lot of money to save a lot of money by systematically paying yourself first and taking advantage of compounding interest over a long period of time.
1. Stop borrowing money
The first premise of having a solid financial plan is living within your means. You can stop today, from borrowing any more money and accumulating any more debt. Sounds simple, but it is often very tough to do. You must get to the point of being sick and tired of being sick and tired of always being broke and having to borrow money. Living within your means starts with taking care of the 3 human needs first, food, shelter and clothing. As human beings our first natural instinct is to survive.
“The rich rules over the poor and the borrower becomes the lender’s slave” – Proverbs 22:7
2. Pay yourself first
The next step is paying yourself first. Let’s explore this premise. If You Make $80 per Day, put $4 in your piggy bank every day. Pay yourself first is how wealth begins to accumulate. But do you live your life that way? Most hard working Americans don’t.
We Americans try to pay the mortgage or rent, electric bill, gas bill, food bill, kids bills, insurance bills, car bills, internet bill, cable bill and we have the intention to save what is left at the end of the month. But how is that working out? If you are like most Americans, you have too much month left at the end of your paycheck. Reverse this today. Start the month by paying yourself first, even if it is just $100 which is actually less than $3 per day. We are worth at least that much, don’t you think?
Then some way somehow all of your bills will still get paid. But what will happen is you won’t waste as much and you will now have an established savings. We all waste $3 per day somewhere, whether it’s our favorite coffee or energy drink or our fast food lunch or that pack of smokes or a 6 pack of our favorite beer. By paying yourself first, you will begin to waste less money and become focused on growing your savings.
“A journey of a thousand miles begins with a single step.” – Lao-tzu
3. Make paying yourself first a lifetime habit
People who have a habit of saving or paying themselves first never miss the money. I have worked with hundreds of clients with very modest incomes that truly believe “I’ll start saving as soon as I make more money.” This is a huge myth because you can begin to save money on any income. The truth is your spending is just like a cork floating in a bathtub. The income is the water. As you add more water to the bathtub, the cork begins to rise. If you believe this myth, as your income rises so will your spending. Often I see clients will justify needing a new car, or a bigger house or better computer and no income is being saved. We live in a consumer-driven society. The shiny new car or gadget is always after your money.
Reverse that trend by paying yourself first before your spending spree. This is money you will never miss and all of your bills will still be paid. By paying yourself first, you will find you will begin to waste less money on cigarettes, energy drinks, gourmet coffee, eating lunch out or wherever you are blowing your money. You can make this change today!
“A penny saved is a penny earned” – Benjamin Franklin
4. Simply Save 5% of What You Bring Home
If your take home pay is $500 per week, then put $25 immediately into your savings account every week and forget about it. That $25 per week equals $100 per month or $1,200 per year. To calculate with your exact wage go to this wealth calculator: http://www.yourfriend4life.com/calculators/accumulate-wealth-calculator/
5. Start saving early
The earlier you start saving and the more you can save, the larger your retirement account will grow exponentially due to the concept of compounding interest. There are very few get rich quick schemes out there that actually work, but get rich slow does work if you remain disciplined to paying yourself first.
Jenni was only 21 years old when she went to work in the real world and defined her independence. She has a written plan that she follows like clockwork. “Jenni” manages to save $136.75 per month which is 11.8% of her modest $1,160.00 gross earnings per month. She never misses this money because this habit has become a discipline that has paid off for her. Her monthly contribution of $136.75 invested properly at an 8% over her lifetime will yield her just over $1,000,000 by age 70. “Jenni” understands the math of compounding interest and will retire a millionaire!
Don’t forget – you DO NOT have to make a lot of money to save it! But you also have to start as soon as you earn it.”
Contributor: Reggie Mares, Senior Agent – Your Friend 4 Life
Specialties: Expertise in Life Insurance, Disability Insurance, Annuities, Long Term Care Insurance, Supplemental Insurance and Tax-Free Retirement Plans. .