Money Girl's 5 simple principles of building wealth and achieving financial success.
Many people think that getting rich must be a complex, fancy processthat’s out of their reach. Though there are many paths to financial freedom, the reality is that building wealth can be a series of simple, small steps that you accomplish over time.
In this episode I’m going to give you 5 principles of building wealth. If you’re already following them, you’re on the right path to achieving financial success. If not, you’ll know exactly what to do.
Principle #1: Start Saving Early and Automate It
One of the most important factors in how much wealth you accumulate depends on when you start saving. Starting early allows your money to compound and grow exponentially over time—even if you don’t have much to invest.
Never make the mistake of thinking that you’ll start saving in the future. If you wait until you have more money, get a raise, earn a bonus, or get a tax refund, you’re burning precious time. That’s because waiting to invest even small amounts today will really cost you in the long run.
For instance, let’s say you invest $200 a month starting in your mid-20s and get a 7% average return. If you do that for 4 decades, you’ll have close to $525,000 when you’re in your mid-60s.
But if you wait to start investing until your mid-30s and invest twice as much each month, or $400, you’d only have about $485,000 to spend during retirement, assuming the same return.
In other words, waiting 10 years to get started means you had to pay more out-of-pocket for decades—and left you $40,000 short!
Because it’s so easy to procrastinate saving, the best strategy is to automate it. Have money automatically transferred from your paycheck or bank account into a savings or investment account every single month.
Putting your financial future on autopilot simplifies your life and insures you’ll slowly get rich. I’ll tell you more about where to put your money in next principles.