Monday, August 3, 2009
Your first order of business in saving money is to save some emergency funds. This is just so important. Many people will save up a bunch of money and then invest it right away. That is a problem, because they do not have any emergency savings. Emergency money is so important because it will protect one and one's investments from unforseen events. If you do not have any emergency funds, you will find yourself in a heap of trouble when something comes around. You will probably have to liquidate your investments. You'll need to save up a decent amount. 3-6 months living expenses is recommended by most gurus, but we recommend having a year of savings. The reason is somewhat obvious. You don't really have 3-6 months savings. What if your car breaks and insurance doesn't cover it? There are many things that can happen that require you to spend a great deal of money. So, a year of savings might only last you 6-10 months. A year is advised. Better get started.
Why is saving money such an important first step? The answer is simple. You need a seed to plant. You are trying to grow a tree that grows money for you, aren't you? You'll need a seed to plant. The seed cannot be a small amount, such as $20. You'll need to save up a considerable sum of money that can can be planted (invested) wisely and watched over to turn into a great fortune. Often, this seed can be planted in the form of a down payment on a home. Entrepreneurs can use this seed money to start a business. Either way you do it, however, you'll need a seed of money. So, save for a few years, save up a seed, and get going.
Think about it. Why is saving money the hardest step in getting rich? There are several reasons, actually. Saving money is the hardest part because most people have difficult having a lot of money but not spending it. They find it hard to see all these goods that they want to buy, having the money for them, but still not buying them. That is very difficult. Also, most people are not rich, and so, naturally, most people have poor money management habits. These people will think you're crazy for the way you handle your money. It's okay, though. Let them laugh. You're on your way to becoming a multi-millionaire. Don't let them bother you. Keep steady, and keep saving your money.
Now that you've cut your expenses and increased your income, you've come to the boring part. Now, it's time to save money. You'll need to save for a few years. Yep, a few years. Sounds hard? It is. Sounds boring?..........It is. But, it's time that you do it, and once it's over, it's over forever. Once it's over, you'll feel better about yourself, be more financially secure, and be more ready to tackle the world of getting rich than ever before. The hardest process of all in getting rich is the process of saving money for a few years. If you can get past this part, then you definitely can be rich. The hardest part is over only a few years away. Get started.
Sunday, August 2, 2009
So, you've cut your expenses while increasing your income. Your friends and family are watching you do this, and they probably think you are crazy. Few people who are poor or middle-class understand somebody who makes more money but spends less; that is not the average person's way. To them, a raise means more stuff. The more money they make, the more stuff they have. Not you, however. The more money you make, the same amount of stuff you have: the minimum possible. But, you're going to be rich, long term. So, keep at it. Keep being insane. It will pay off in the end.