I’m keeping this writing short as it’s a beautiful day outside and I feel like going swimming.
Today’s write-up is about saving a certain portion of your income. If you save even 10% of what you make, you can use that money to make you money. Then, take that money that you make from your investments, and keep reinvesting it. Over time, it should hopefully grow big enough to the point where you will be able to be financially independent.
Here’s how it looks:
As I mentioned in an earlier post, I’m reading Napoleon Hill’s Law of Success book. Of the fifteen success principles Hill outlines in his book, “The Habit of Saving” is one that he feels is essential to become truly successful. Here is an example of how Hill believes people should save their money and an example of how they are actually doing it.
“Generally speaking, a man who works for a salary should apportion his income about as follows:
Savings Account – 20%
Living – Clothes, Food and Shelter – 50%
Education – 10%
Recreation -10%
Life Insurance – 10%
Total = 100%
The following however, indicates the approximate distribution which the average man actually makes of his income:
Savings Account – NOTHING
Living – Clothes, Food and Shelter – 65%
Education – 0%
Recreation – 35%
Life Insurance – 5%
Total = 100%
Under the term of “recreation” is included, of course, many expenditures that do not really “recreate,” such as money spent for alcoholic drinks, dinner parties and other similar items which may actually serve to undermine one’s health and destroy character.”
So there you have it! Ask yourself, “Where is my money going to?” Then, decide in advance how you are going to budget your money. You can then open up a savings account for the sole purpose of saving and investing. Every time you receive a check or some form of income, budget that money according to your new system. At first this might seem hard, but you’ll actually begin to look forward to seeing your savings account grow. You’ll be excited that your financial independence is looking brighter as you’re no longer spending your money on frivolous things.
As I had just moved to a new state/place, I wasn’t keeping track of my income and expenditures as I had done in the past. When I decided to see where my money was going, I was shocked to see I was spending hundreds of dollars every week on “recreation”. Dinners, bars, clubs, etc… While it’s fun, it was alarmingly to see how much I was spending on waste. Instead, I decided to get myself on a budgeting system and only spend 10% of what I make on recreation. So far the results have been good and have included a fatter wallet and more money in the bank. Also, as I’m not going to bars, clubs, or expensive dinners as often, I feel much healthier, am sleeping better, and am finding new things to do with my time, energy, and money.
So try it out! And feel free to let me know how it goes.
