Business Insider | By Kaathleen Elkins
“If you want to get rich, all you have to do is make a decision to do something that most people don’t do,” writes David Bach, who became a millionaire by age 30, in his book “The Automatic Millionaire.”
That decision is to pay yourself first.
“The reason they think they need a budget is to help them figure out how much to pay everyone else so at the end of the month — or the year, or their working life — they will have something ‘left over’ to pay themselves.”
This mindset plagues many of us, and is “absolutely, positively financially backwards,” he emphasizes. “And because this system does not work, Americans wind up trying some pretty strange ways to get rich.”
These routes to wealth include: winning it, marrying it, inheriting it, or suing for it. But there is only one proven way to get rich, Bach writes, and it also happens to be the easiest way: “Nothing will help you achieve wealth until you decide to pay yourself first … [It] means just what it says. When you earn a dollar, the first person you pay is you. Most people don’t do this.”
If you’re not comfortable making a 10% contribution, it’s better to start small than not start at all. In fact, Bach started by setting aside a mere 1%. Over time, he gradually increased his percentage — from 3% to 10% to 15% — until he reached 20%.
Once you’ve decided on a percentage to contribute, make it automatic, Bach stresses. This way, you’ll never even see the money and you’ll learn to live without it.
“You’d be amazed how effortlessly you can learn to live on a little less,” he assures. “You can’t spend what you don’t have in your pocket.”
- 5 Products Americans Are Not Buying Anymore
- 5 Ways to Keep Christmas within Your Budget
- 5 things to know about the next iPhone
- 9 Ways To Make Money While Traveling
Related articles from around the web
- The 11 smartest things to do with your end-of-year bonus (businessinsider.com)
- Deadline approaches for mandatory IRA withdrawals (seattletimes.com)
- Wait! Don’t Close the Books on 2015 Before Making These Tax Moves (thestreet.com)
- Young Family Aims to Kickstart Investment Program (news.morningstar.com)
- Thrift Savings Plan Rollover – How to Transfer your TSP into an IRA (tadpgs.com)
- 3 Tips to Handle Your Money For The Future (gentwenty.com)
- 6 Christmas Gift Ideas for a Newborn (thirstiesbaby.com)