How to get rich the boring way
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Would you rather be rich or rather be sexy? Is the opening chapter in Ramit Sethi’s book; I will teach you to be rich.
This is your lesson plan on how to get rich:
According to Sethi a fifth of young people think that they will get rich through the lottery. However, of America’s millionaires, 80% are first generation affluent. Meaning that they didn’t inherit their wealth but got rich through controlling their spending and investing their savings.
On average, millionaires invest 20% of their household income. Although most financial advisers typically recommend 10% in the UK, so mere mortals are already at a disadvantage.
This is why:
If you had started investing £10/$10 a week and got a 5% return from your savings after 1 yr you’d have £532 and after 10 years £6,728! if you’d invested £50 a week, then you’d have saved an amazing £33,643.
So the moral of this story is get saving and get saving quickly, saving the maximum you can each month because the earlier you start, the richer you will be.
If you’re in the UK, the government allows you to save this money tax free in a Individual Savings Account (ISA). This can can be in the form of cash or stocks and shares and is subject to annual limits – £10,200 from 6 April 2019 (£5,100 in Cash) but whatever you have in the Cash ISA will come off this total amount. (ie in the cash ISA you can save up to £100 a week, with a week off at Christmas!)
If you’re struggling to find any money to save, go and visit the 50 ways to save £50/$50 maybe you can save enough from there to start your savings account.
I save monthly in an ING direct Internet account because they typically pay good rates of interest and I lock up my money for as long as I can to get the best return and stop me raiding my ‘piggy bank’.
So first of all you need to create your emergency fund, but once you’ve done that you need to :
Set a savings goal
You are more likely to save if you have a savings goal. For example, if you are saving for a house and you need to save a deposit, then you are more likely to hit this savings target if you have a savings goal (say £20,000/$20,000) for the deposit.
Say you set yourself the target of saving £20,000 in 5 years, that’s roughly £10 a day. If you normally go out 3 times a week and spend £30 a time, staying in 2 nights will almost meet your weekly savings target.
If you normally succumb to peer pressure to go out, let your friends know you are saving for your house deposit, then they are more likely to be understanding and not give you so much grief. As most people will recognise that this is a worthy thing to be doing.
What’s stopping you now?
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Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
I used to be fantastic at saving, until I got a car. Then I got married and moved out of home, and now expecting our first child – savings seems to have been put on the backburner. But thanks for the reminder Matthew, cause i need to get back into the savings swing of things.
.-= Tom | Build That List´s last blog ..Flipped: The Complete Guide To Flipping Blogs For Profit (Review) =-.
Matthew Needham Reply:
March 24th, 2010 at 7:29 pm
Tom, thanks for your comment! Everyone seems to be having babies! When is yours due? Ours is in June.
It’s so hard to save, I agree, but by starting small (even a £1/$1 a day) will make a difference.
Have a look at the 50 ways post, I’m sure you’ll find something there to start you off.
Matthew
Tom | Build That List Reply:
March 24th, 2010 at 9:15 pm
It does seem like that doesn’t it! Ours is due on the beginning of July, so just over half way. (and just after you).
I will definitely check out your 50 ways post. I think I missed it the other day.
.-= Tom | Build That List´s last blog ..The Autoresponder Code – Latest Updates =-.
Matthew Needham Reply:
March 25th, 2010 at 8:02 am
All good! We are having a boy. Is the world ready I ask myself!!
I think you’ll find those tips useful. In fact once you’ve read them why not take the challenge to save $1000/£1000 in 30 days. I’m over half way there through simply changing a few things.
What if I wanted to be rich AND sexy? Why comprimise
For most people, it comes down to skipping 2-3 restaurant meals a month. In the US here, people eat out a LOT. And by that I mean fast food and restaurants both. It’s something that I’m personally struggling with a lot.
If I can keep it down to eating out once a week, I’ll be extremely happy. That alone could save me $40-$60/week… yep!
.-= Moon Hussain´s last blog ..Are You Embarrassed Of Saying “Passive Income” Out Loud? =-.
Matthew Needham Reply:
March 23rd, 2010 at 9:47 pm
Lol. Yes, we’ll individually we are all sexy, but to most people saving money is not sexy. Winning the lottery, selling an awesome product online or selling your business are all sexy in most people’s eyes.
If you take your $160-$240 and add it to the other savings in the next month, then you’re a quarter of the way to saving a $1000 dollars this month!
Thanks for your comment Moon!
Great post! I plan on investing shortly in the future, into what I am not sure yet but I want to get a couple how to books under my belt so I feel more comfortable testing the waters. Money is not something I like to put through trial and error if I have the choice. Got some bills to pay first and then will be diving into that. Again great post man!
.-= Ryan Hanzel´s last blog ..Find your rabbit hole =-.
Matthew Needham Reply:
March 23rd, 2010 at 9:44 pm
Hi Ryan, thanks for your comment. I have a post coming up on that very topic in the next few days. I recommend you start with Rich Dad, Poor Dad, but if you’re after something more advanced then Multiple Streams of Income (tomorrow’s Wednesday Wisdom) will be a great book for you.
Good luck paying the bills!
Love this Matthew.
It’s inspired me to start saving which is something I’ve never done. I’m taking action on this tomorrow and now I’m really excited.
.-= Ben´s last blog ..7 Things I have learnt about life from being a Martial Artist. =-.
Matthew Needham Reply:
March 27th, 2010 at 12:27 pm
Hi Ben, I’m really glad you’ve found inspiration in this. Good luck in your becoming rich!
hi mathew,
how are you?
thanks for this reminder. this is the second or third time i am coming accross ing being mentioned.
i think its something i’ve got to look into and if it’s worthwhile transfer my isa account over to them
take care
.-= ayo´s last blog ..Personal Development Roadblocks =-.
Matthew Needham Reply:
March 27th, 2010 at 12:25 pm
Hi Ayo, thakns for your comment. I’m very well thanks, I hope you are too.
Good luck in building your fortune!
I like this and what’s important to understand here is if you have friends who could care less and they keep tempting you to go out with them during the week, it’s time to get new friends or explain and be tough with them.
I say this and this alone because peer pressure is what most of us go along with and don’t stand up for like we should. That being said, if there was more peer pressure to save money and not spend, well, can you see it…? lol
.-= Eric´s last blog ..Erica JoLynn Is Born =-.
Matthew Needham Reply:
March 27th, 2010 at 12:19 pm
Well that’s a very smart observation Eric!
As you say, you need to be strong, stay focused and you will achieve your goals.
Thanks for your comment!
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