Do you want to be rich? Some don't even consider the possibility. It sounds like an unattainable goal for many of us because we may not make a lot of money or we may not be able to save enough. After all, times are tough financially in the United States and around the globe. But the truth is anyone can be rich, and the formula is extremely simple. Save one hour's worth of your daily earnings every day. Can it really be that easy? Yes, it can.
Saving 12.5% of Your Income
The person behind this concept is the financial guru David Bach. He recommends that people keep 12.5 percent of their pretax income. When we think of that in large numbers, it seems impossible. If you make $41,600 per year, that requires you to save $5,200 each year. When your budget feels like it is on thin ice already, you may see no way to do that. But don't look at the big picture. Take baby steps or small chunks. If you make $20 an hour, save $20 each day you work. Both you and your spouse should be saving one hour's worth of your daily wage. If both of you make $20 an hour, that's savings of $40 per day which adds up to annual savings of $10,400 based on 52 weeks of five days per week. Of course, the number of days you work may vary.
Working out the Savings
These figures give us monthly savings of approximately $867. With monthly deposits of this amount at a 7.0 percent interest rate compounded annually for 25 years, you will have $706,429.09 saved, roughly. That is almost three-quarters of a million dollars. But, the good news is that your earnings will likely increase during those 25 years several times. That means that you can get the $1 million mark easily, all by saving one hour of everyday wage.
Pay First to Yourself
Of course, no one gets paid daily. Odds are, you are paid every week, every two weeks or even monthly. And by the time you get your paycheck, you may be tempted to put that money to other purpose rather than sock it away into savings. To avoid this temptation, David Bach recommends that you pay yourself first. That means that before you pay any of your bills, put money into savings. Automatic withdrawals from your checking account are the easiest way to pay yourself first because it ensures that you will not spend the money on something else.
This method goes to show that not everyone who is rich gets that way because money is just handed to them. You don't need to win the lottery. Your rich uncle doesn't need to die and leave you a whopping inheritance. Getting rich is attainable for anyone who is willing to sacrifice one hour's worth of income every day during the duration of their career. You will probably not even miss such a small amount of money.
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