The money question, who doesn’t want to have that amount?
Imagine what you could do with 10 000 bucks…or don’t because you’re a responsible person and you would invest it in stocks or your pension investments. 🙂
See, the trick with working towards large amounts of money, is that they also require sacrifice of some kind. There’s always something you have to be willing to give up in order to achieve it. So here are my 5 steps to get you going!
1: Set a goal
The first goal i set for myself was 10 000 Euro (around 12 000 USD)
At the time, that was astronomically high, i’ve NEVER had more than a few hundreds in my entire life! How was i going to do that?!
Well, turns out that just determining a goal was actually a big help, it helps channel your focus towards something positive in the long term. The goal you put for yourself has to be high enough to challenge you, but also achievable enough so you don’t have to economically suffocate yourself in order to make it.
2: Keep track of your progress
Ok, awesome, you’ve got your goal. So now what?
Just carry on as usual while hoping that number magically appears in your bankaccount? I don’t think you’d be reading this if it was that easy.
The only thing you should be worrying about is what Paula from Affordanything.com likes to call ‘The gap’. It refers to the space between your income and your expenses.
The wider the gap (the less expenses and the higher your income) the sooner you’ll reach your goal, simple right?
Your main effort should be focussed on widening that gap.
How, you ask? Well by looking at your expenses with a looking glass.
Do you need a TV subscription of several hundreds of dollars? Could you find an alternative? Maybe a bit less eating out? Dig deep and be honest with yourself.
3: Use a budget
Spending money is natural for us, it almost seems like that’s what society wants us to do.
Just turn on the TV and there are literally 50 ads screaming for your attention to buy their amazing product that will ‘change your life’.
But honestly, is there ever a product that truly ‘changes’ our life for the better? I certainly thought my second Macbook would change my life, now i was able to work faster!
But after a few months, the excitement from the purchase went away and life went back to normal. (I never worked noticeably faster though…)
Living on a budget isn’t necessarily ‘fun’, but it does the trick amazingly well!
Start by tracking your expenses for a month or two. Where does your money go? Are there certain areas that you can downsize or cut completely?
Coming to terms with your own expenses like that can be shocking, it certainly was for me. But be brave and face the fact that you’re spending more than 100 bucks on espresso’s every month! (Guilty)
To help you start your budget, i’ve prepared an elaborate excel file for you to track everything. Just drop me a line at firstname.lastname@example.org to receive it!
4: Automate what you can
If you can’t see it, you can’t spend it.
From your budget you should be able to tell how much you need every month to cover the bills and how much you can save.
Pay yourself first, pay your bills and groceries with what’s left and stick to your budget!
By automating as much as you can, you can relax because now your bills are on auto-pay, your savings are automated and if no unforeseen-able event takes place; you’re set to achieve your goal!
5: Start Investing
Awesome, you’ve done everything right and your gap is widening, well done!
So you’re well on your way towards your goal, but can you speed it up?
Investing your hard earned cash into stocks/bonds/Funds/FTE’s/… gives you a higher interest rate than an online savings account, but with greater profit comes greater risks.
more on that in later posts!
Starting to save and face your expenses can be hard, i know that first-hand. But it’s a small sacrifice to get to that awesome goal in your future, your futur self will thank you!
I know this article is just a global set-out. I will explore the different subjects later on and link back to them here.
So now it’s your turn! What do you find hard to incorperate in your saving-habits? What’s that one splurge you can’t go without? How did you start saving?
Tell me all about it in the comments!