If you won a million dollars today, would you spend it all immediately buying loads of stuff so that by this time tomorrow, it’d be all gone?
I’d bet you wouldn’t, but that’s what a lot of people are doing; not with the money they win, but the money they make.
I don’t often write about wealth as I’m not that wealthy in financial terms, but lately it’s surprised me how often my friends do the exact opposite of what nearly every financial planning book advises; they spend first, and save later.
First Rule Of Creating Wealth
There’s nothing truer about being rich than what a friend told me once; you’re only as rich as you spend. If you make a million but spend a million, you’ve still made nothing (If you make a million but spend two, you’re in trouble!).
That’s why the first rule of creating wealth made so much sense to me when I first heard it. Instead of paying for your bills, clothes, outings, widgets and gadgets first, you pay yourself first.
Which is the opposite of what most people do; but consider that a lot of people are hardly cash-rich and are in credit card debt, maybe it’s a good idea not to join them!
How Much Should You Save?
Most every book I’ve read advises that you start with 10% of what you make. Whatever you make, the moment you get it, you immediately pay yourself first with 10%; put it away in the bank and it’s yours.
If you can’t make 10%, start with a smaller amount first, but the sooner you start, the more you’ll begin to have.
I can personally guarantee that after you watch that amount in your bank account accumulate, you’ll won’t stop at just 10%. After a while, saving your money can become fun, even addictive!
How To Create Financial Wealth
While I’m not an expert on financial matters, here are a few bloggers who are:
Free Money Finance
I Will Teach You To Be Rich
Adam Khooâ€™s Philosophies & Investing Insights
And I recommend my friend Adam Khoo’s Secrets of Self-Made Millionaires course; he made his first million by the tender age of 27 so I guess he knows what he’s talking about 😉