If you are making good money and have a decent job, then don’t buy an expensive car or buy or rent a big house, expensive furniture, watches, and clothing. Don’t spend lavishly on expensive vacations and parties. Save only $15 to $25 per paycheck and I will show you how you will become a millionaire in 20 years.
Note:
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As regards the articles on MORTGAGE, be careful when taking decision
unless you want to become a SLAVE to your debt.
We all humans have a nature of spending. Particularly America is a country where people will borrow money and keep on spending until the time they cannot get credit anymore.
Learn to invest at very young age, you have to learn to save so that you can invest and start a small business. Make a daily list of items that you spend money on, and then you are going to see where and how you can save. You will reduce those expenses. It is exactly like if you are eating too much outside. You can cut down on eating outside and spending up to six times more for one meal then what you can cook at home.
According to the American Consumer Bureau, Americans, on an average, save only 4% gross of the money they make. Now, when we say 4% gross of the money, it is not every American who saves. Some Americans might be saving nothing, but when we average it out, we can say Americans save 4% of their gross. I will say majority of the young fresh college graduates or high school students don’t save at all, but rather, they are either spending their parents’ hard earned money which they give them to keep them happy or whatever reasons are. You go to any mall or restaurant or bar, and they are full of young children and adults. The only shops that are thriving in the recession are the ones which are dealing with young children and adults. As the young adults who are either not working of if they are working, they are making $7 or below an hour. Some of them are also renting their own apartments. Most of them have credit cards. They have stopped getting higher education because they cannot afford to do that, as they have too many bills to pay. Malls are full of junior wear fashion clothing, electronic stores, phone stalls, jewelry, fast food, and other restaurants which basically cater to these young kids. Even car dealers and electronic stores like Best Buy and Circuit City are full of these young kids who are buying either small stuff or big stuff on credit.
Do these kids have more spending power than adults who are in their late thirties an over? No, they do not have more spending power than them. Then how come these kids can spend more? The answer is easy. First of all, these kids have no savings at all. They owe money on their credit cards and they have leased their cars for which they are making monthly payments. They are making monthly payments on their insurance also, so they are living hand to mouth. Whenever these kids run short of money, they run to their parents. Parents also give them money either because they love them or they think that it is their obligation to help their kids in meeting their spending habits. Now most of these parents also who are in their prime have not got any money. Parents are in their prime and both husband and wife have been working and are a middle class family who are also working hand to mouth. Some of them have 3 or 4 months of savings in case some emergency happens. Most of these parents also do not think it is necessary to save.
Young students and adults should be given a credit course, where they should be taught how to save and invest. Young adults should not be allowed to have credit cards until the time they can prove that they can earn and save to pay off the credit card and the borrowed money back. If people will learn how to save, it will eventually be a stronger economy and not a bubble economy. Look at china, which was a poor country many years ago. Now, they are lending us the money. We have a trade deficit in billions of dollars with China. We are printing notes and borrowing. It had never happened in the history of the USA that our currency has lost so much value against all the currencies of the world.
Young adults, instead of putting them in debt when they come out of college, we should teach them how to work hard, save and then own their houses, which will not be loaded with debts, but a free American life.
Savings is an umbrella when it rains
Have you heard the saying that banks will lend you money when you don’t need it and then won’t give you anything when you need money the most? Banks are also famous for giving you an umbrella on a sunny day and then they take it away when it is raining. But if you have your own savings then you can use your umbrella when it rains, as your savings are your umbrella in the hot sun as well as when it is raining.
Save for your hard times. If you lose your job or your spouse dies or your kid has an accident or you are in a business which is of a cyclical nature which goes down or if you get into a lawsuit and you lose, then you need a cushion for at least 6 months that will give you a chance to adjust with new circumstances. You don’t need to keep this money in cash. You can keep one month of your emergency funds in a money market accounts and the rest in stocks or bonds which are cashable right away.
If you have saved a lot of money and want to tie it up for a short period of time, then you can also lend the money in first and second mortgages on houses and commercial property which have a lot better interest returns.
By Ashok of http://becomerichinfiveyears.blogspot.com
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