Four Easy Things To Do To Get Wealthy Systematically.

Here are four easy things to do to get wealthy systematically; these four things do not directly have to do with inflation but with trading and investing. Also, they have to do with living a good life. Because, if you do not have money to invest you can never get wealthy. That being said, think about it, if you research what the best investments are but never put money on them, what good does that do? In other words, knowing the right thing to do doesn’t matter if you never do it.

There is never a perfect time to do the right thing.

Most people know they should be investing and accumulating wealth for the future. They know that they should be putting money aside for the future but the kids need braces and the car needs a new water pump and after all, it’s softball season and the kids need new equipment. So it seems that they should wait to invest, WRONG!

Guess what? Next week or next month it will be something else but there is always some money spent on Starbucks or new fishing reels. 

A good rule of thumb for savings and investing.

Advisors have been saying for years to at least save 10% of your income, but why don’t we do it? Something always comes up that steals our savings and our investment capital. 10% is 10 cents out of every dollar you earn.

Pay yourself first!

Do you work hard your whole life paying bills? But when do you pay yourself? If you are like most people you pay yourself last. Consequently, you do not pay yourself most of the time. When reading the life stories of Robert and Kim Kiyosaki they noted that one key to their success was paying themselves first and paying their bills last.

They talked about struggling to pay their bills at first but always finding a way. They had to save money initially for their first down payment on their first property. But because of their early sacrifices, they built positive cash flow. Now they have a large net worth and are worth millions. What if the perfect opportunity comes your way and you just needed $5,000 or 10,000 or even $1,000 but you did not have it?

The 1% Theory.

Insanity is doing the same thing over and over and expecting a different result. Possibly that statement relates to the fact that you know already you should be saving 10% but are not doing it because you are waiting for better circumstances before starting. Instead, I recommend you stop waiting for a good time to start investing and saving money. Start with 1%. You are probably wasting one percent of your income now anyway. I got this idea from the late great Jim Rohn. Mr. Rohn said if saving 10% seems too difficult for you, start with 1%.

One penny out of every dollar.

Reasons why this works! Firstly, one penny out of every dollar seems ridiculously small. But the smallness of 1%, one penny out of every dollar means it takes away every excuse to get started. Never getting started is a big reason people fail to achieve financial success. Secondly, once you start saving 1% of all your income and your standard of living does not change and you see your savings growing you will most likely say the following: “This is silly!”. I know I can save more than this and you can ramp it up to 2% and then eventually more, saving and investing more and more. Some wealthy people live off of 10% of their income and invest 90%.

The 1-1-1-1 Challenge!

Here is my unique challenge I call the “1-1-1-1”! It stands for 1% savings, 1% giving and 1% paying off debt, and 1% fun money. This idea could easily be the 2-2-2-2 or 3-3-3-3 or more I hope you get my point. Everyone is starting at different levels. Possibly the 1-1-1-1 is too small a starting place for you for some this is a challenge because they have never saved money in their whole life. But for others, this is a little too easy. I recommend starting small.

Reasons for the 1-1-1-1.

If you just focus on savings for investing you leave other areas of concern unaddressed. Having systematic ways of saving in these categories reduces the risks of burnout and imbalances. If all you focus on is saving for the future you will live miserly. Like a strict diet, you fall off the wagon like binge eating you can over-indulge in bad spending habits after being too frugal. Let’s look at each of the categories of the 1-1-1-1 individually.

Savings.

Building a war chest is about having capital for investing. This is money that you never plan to spend but instead reinvest in timely investments. This is how wealthy people build generational wealth. By making savings a ritual, a bill you pay, you simplify the process. You never ask yourself if you can afford to save this month. Because you never ask yourself if you can afford to pay your car payment or your mortgage this month. “Bills” are necessities and savings is a bill you pay to yourself. We spend more time on the other three parts of the 1-1-1-1 because we have already touched on the savings part previously. By the way, as we are talking about inflation, savings doesn’t mean you have to park all your savings in dollars but you could use other stores of value.

Giving

Giving is the law of laws. As you sow, so shall you reap. Give and it shall be given unto you.

“Give, and it will be given to you: good measure, pressed down, shaken together, and running over, will be given to you. For with the same measure you measure … Luke 6:38

Jesus Christ

Feel free to feel good!

Personally, it makes me feel good. Working to pay your bills is ok, but working to give more that’s another level of living. I do not know how it works but it seems that the more I give the more I have to give. If you believe in God you can say God blessed you. Or if you believe in psychology you can believe you have empowered yourself subconsciously to feel good about earning more money. Thereby attracting more money to yourself.

A side note, giving in to get is not giving but trading. If you give from someone and you expect something back that is a transaction and not giving. But it is ok to expect for the universe to give back to you for giving but now to expect or presume from whom. Subsequently, it’s alright to make business transactions and to do some trading but do not categorize it as giving.

Paying off debt.

Some people’s whole life is spent worrying about debt. If you make your goal to get out of debt, your focus is on debt and Bob Proctor has said if your goal is to get out of debt you will always be in debt because your focus is on debt.

The reason for a paying-off debt fund is to set up an account solely for paying off debt with the 1-1-1-1 plan and increasing it to a 2-2-2-2 plan or eventually possibly a 10-10-10-10 plan but you set it up and forget about it. Eventually, when you have no bad debt you can add these funds to your savings and investing funds and change the formula to a 2-1-1 type plan.

Not to be used to pay your minimum payments.

This account is not for paying the minimum on your credit cards but using it to pay off the principle in one consumer debt account at a time over and above the monthly payments till you have no bad debt to speak of. It’s a set it and forget about it account.

Stop focusing on debt but start focusing on prosperity. Hopefully, as you are advancing in this habit of paying down your bad debt. (Bad debt is debt that is not borrowed to build an asset like Real Estate or Building a business that shoots off cash flow.)

Some gurus like Dave Ramsey say to not worry about investing at all till you get rid of all your consumer debt and even pay off your home and car, but I could not disagree more. While high-interest credit cards and consumer loans are the enemies, you should be moving towards something not only away from something.

Fun Money!

All work and no play makes Jack a dull boy. What you do not want to do is become a miser. Don’t starve yourself of an outlet for fun completely till you go out on a binge shopping spree and blow all your savings or spend your rent money.

By having a  fun money account you can build a pile of money that is set aside for frivolous spending and when you are done spending it, you are done. It creates a release valve for fun. 

Put things into perspective

It puts things into perspective, because if you are spending more money on frivolous spending than wealth creation then you need to think about it. Frivolous spending could include partying and drinking or gambling buying expensive purses and shoes and going to strip clubs or it could just be eating out at fancy restaurants and traveling.

Live Your Life.

This is your life, live it the way you want but unless you make money work for you you will always work for money. By using the 1-1-1-1 plan, you can simultaneously save money for investing and giving and paying off debt and have fun money to  not get bored along the way. Now you can focus on increasing your earnings so these accounts can get fat. You do not need to stop at 1-1-1-1  or 4% of your income for these but it’s an easy starting point.

Do not use the same accounts!

One key to this plan is keeping separate accounts for each of the separate funds. The reason for separate accounts is so that they are not connected to your primary checking account. Because if your 1-1-1-1 accounts are connected to your primary checking account, when you are in a bind you will be tempted to use the money when you are a little short.

New Account Ideas.

Fortunately, there are plenty of online checking accounts that offer better benefits than some of the traditional banks. Here are some easy account ideas I recommend. Monifi offers a small interest rate but something is better than nothing, and  I have found it takes longer to get money out of this account, in my experience five business days.

Monifi

I like Monifi for my savings. It’s a good place to park money till you have enough to place in an investment vehicle like Stocks, Real Estate or Precious Metals.

Chime

Oxygen

Is it secret? Is it safe?

This is your wealth-building, secret accounts. That being said, do not keep debit cards from these accounts in your wallet. Tie a rubber band around them and put them away somewhere secret and safe. Now that you have your 1-1-1-1 or 4-4-4-4 accounts set up, have fun earning money and watching them grow. Pay them first!

More Investment Ideas.

Once you have a little capital to invest here are some investment ideas, check out my blog here.