I know that BiggerPockets.com is a website devoted to real estate investing, but our ultimate goal is to help our visitors find wealth. I was just reminded of a few simple steps towards creating enormous wealth from an article, Meet the Automatic Millionaires. The article actually profiles two relatively hardworking families that have set their sights on becoming millionaires (and have succeeded). What is their big secret?
1. Living frugally / below your means.
2. Paying yourself first
Using this two-prong approach, you can be on your way to becoming a millionaire. Think of all the money you can save by cutting out the Starbucks or a pack of smokes. In a year, you could have a decent down payment on some property. Packing a lunch for work and cooking more often at home are other really easy ways to save up. What about holding off on that new car, and staying with the tried and true used car. Your friends may not be impressed, but they will be when you retire 10 years before they do.
Paying yourself first is another easy thing to help you towards millionairedom. If you take money out of every paycheck and set it aside towards your savings or investments, you will be on your way. The easiest way to do this is by setting up automatic transfers into a savings account from your paycheck. You should set what you pay yourself according to what you can afford, but you must make sure you do it. Setting up a regular program will bring rewards very quickly. Imagine what you can save by taking out $10, $50, $100, $250, even $500 a paycheck to pay yourself. It adds up.
The Figures Below do not include interest:
Paying yourself $10 every two weeks saves you $260/year
Paying yourself $25 every two weeks saves you $650/year
Paying yourself $50 every two weeks saves you $1,300/year
Paying yourself $100 every two weeks saves you $2,600/year
Paying yourself $250 every two weeks saves you $6,500/year
Paying yourself $500 every two weeks saves you $13,000/year
Imagine what interest will add . . . (interest rates are rising steadily!)
So, if you’re looking to start acting like a future millionaire, create a plan of living below your means and paying yourself first. You won’t regret it!