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The millionaire’s mentality; it’s not how much you earn that is important. It is how much you can save!

As obvious as this might seems, far too many people have difficulty saving. 

Create a budget where you pay yourself first from every paycheck. This means your savings comes first. Whichever amount you save, 10 or 50 percent of every paycheck. Do this always first through an automatic withdrawal arrangement with your local bank or credit union.

You must manage your wealth to become rich. Again, it is not how much you earn that is important. It is how much you save.

Make saving your number one habit! Make it a habit. And financial security will be yours!

You have to learn to save your money before you can be rich. It makes perfect sense. How did Warren Buffet make his first million? Through saving and investing. Without saving, you will not have the extra money needed to create other streams of income. 

As your savings grow you will eventually earn more money from the interest or returns on investments than from new contributions. 

Save a small portion of your money if you don’t have much, and save more when you have a lot. Remember, you want to develop the habit of saving. This is the Millionaire Mindset.

A million dollars may not be worth what it used to be-once considered the ultimate standard of wealth. It is now seen by some people as merely a milestone on the path to financial freedom. Being a millionaire isn’t terribly uncommon either. Over 5 million Americans have done it, why shouldn’t you?

Maximize your savings potential

Your income should rise as time passes. You’ll get pay increases or promotions, you’ll change jobs, and maybe you’ll get married and become a two-income family. Every time more cash comes in to your hands, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.

But for those earning less, if you can save $75 a week and put it to work in a quality mutual fund averaging 8 percent gains per year compounded over 10 years you would have saved $ $60,642.91. Now, let’s assume after 10 years you have a pay increase or promotion and can now save $125 per week again invested in a quality mutual fund averaging the same 8 percent a year for another 10 years. You would accumulate $231,867 assuming you held your investment for the entire period.  .

The magic of compound interest

The above example of consistent savings and investments can be accomplished with the magic of compound interest. This is what happens when you let your investments snowball over a long period of time. Just like a little snow ball rolling down a hill it will grow bigger exponentially beyond your wildest dreams.

To continue with this example. You have seen your savings and investments grow for 20 years. You continue saving for another 25 years. (45 years career span)

But now with future job promotions and inflation growth on job salary. Let’s assume you  can now save $200 per week for another 10 years again invested at 8 percent compounded.

After 30 years total investing you would have accumulated a total investment of $662,167.

And with another 15 years to go to age 65 at $250 savings a week your total would sky rocket to an eye popping $2,479,251.63. This figure takes into account that you do not sell your investments at any time and is a gross number. Any selling of your shares would have incurred a capital gains tax. Contact our local tax department for more information regarding capital gains taxes.

This table is of the  last 15 years of the above example. With weekly contributions of $250 or annually $13,000. However you can see your account growing by $72,276.19 between year one and two. $59,276.19 is earned income. This is the beauty of the power of compound interest or earnings.

Begin saving early as compound interest works on the principle of Interest or Earnings multiplied by Savings multiplied by Time. TIME is the exponential factor that creates the magic.

 

Year:

Balance:

1

$729,089.40

2

$801,365.59

3

$879,423.88

4

$963,726.83

5

$1,054,774.02

6

$1,153,104.98

7

$1,259,302.42

8

$1,373,995.65

9

$1,497,864.34

10

$1,631,642.53

11

$1,776,122.97

12

$1,932,161.85

13

$2,100,683.84

14

$2,282,687.58

15

$2,479,251.63

Capital gains taxes are lower than taxed based on your salary to encourage investment activity. Depending on your annual salary, taxes are between 5 and 15 percent on dividend income, gains on transactions or distribution of income on mutual funds. If your investments are in stocks and you held your investment over the long haul you are only taxable  on dividends paid out. You could however opt to pay the taxes out of your current expenses and allow your investments to accumulate.

This example is based on one income. What if you were to have gotten married and could have increased your savings from $75 a week and have your partner match your savings?

And not to forget, assume your employer has a 401k matching contribution retirement savings plan. Here your savings plan can accumulate totally tax free. Only taxable upon withdrawal at retirement.

It is nice to have a great paying job and successful career. But even the most modest of factory work still affords you the opportunity to save. Savings give you the option of early retirement or starting our own business. While if you did not save you would have no choice but to continue working to age 65. 

These are large figures and perhaps seeing them on your tablet, smart phone or computer screen may seem like fantasy.

I challenge you to take out a calculator and compound away your savings with pen on paper until your age of retirement. The reality of compound interest will overcome all skepticism.

Here at this website www.investmentmillionaire.org. is a savings calculator with a compounding interest rate exponent to calculate your savings over the years.

Make the maximum contribution to tax-deferred savings plans such as retirement savings accounts. Don’t let any chance to save more money get away. 

Read more….

Investment Millionaire
Make a plan and identify your goal
Stop wasteful spending
Start saving
Acquire a good education
Find quality employment
Savings and investments
Buy your first home
Buy adequate insurance
Retirement planning
Tax planning


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