At some point in our lives, all of us think about being wealthy. Settling down and being rich before you attain the age of 30 seems to sound like a distant dream to us. We start idolizing millionaires and people with an income range of seven digits and day-dream of someday being able to reach that stage. The one thing that we must always understand is that wasted dreaming never does any good. Simply thinking about how to be rich before 30 and doing nothing to attain that mark will never help the cause. One needs to chalk out strategies and plan accordingly to achieve that goal. Even though the goal might seem to be a distant reality at first, the more we are firm and determined to achieve, we start narrowing the gap and walk closer to our goals.
How to develop a strategy?
There is no straightforward method or shortcut to be rich within a fortnight. It takes years of patience, hardships, hard work and sheer determination to finally achieve that mark. Before starting to work towards attaining our goal, it is always advisable to devise a full-fledged strategy. Devising a strategy involves extensive research and in-depth analysis of the pros and cons of every development and step that we are going to initiate. It is beneficial to try and talk to experienced investors, people in business, bankers, stock-market agents, insurance agents, etc. to start formulating a well-devised plan.
Is budgeting necessary?
Experts and established millionaires always guide people to find out the ways to budget money. The first way to budget money is to start by formulating your expected annual budget. This will help you analyze our income and your expected expenditure that you are likely to experience. Once you fix up your budget, it is easy to foresee the goals that you need to achieve towards the end of the year. After deciding on ways to budget money, one can also begin setting aside the excess amount that is left every month for saving. People may assume that why to save money for the future when you have listed out your budget and had enough to spend. The lesson that they need to understand is that one cannot be rich without trying to save money and putting it to good use is the best recourse towards being rich. It is always wise to save for the rainy day.
Why save money?
One does not transform into a Steve Jobs or Bill Gates or Grant Cardone without putting in efforts. You may ask this question to yourself that why to save money? several times a day and eventually you will be able to get an answer to it. It is always advisable and smart of a person who wants to be rich to save their surplus money so that it can be used as leverage elsewhere. People are sometimes pennywise but pound foolish. Ordinary people save money whereas wealthy people find out ways to utilize it somewhere better. This change in mindset is what makes you closer towards being rich. So instead of asking why to save money, try devising ways actually to do it.
Difference between saving and investing
Many such people have been saving regularly and in a systematic way for many years and still are not able to reach the goal of being rich. While on the one hand ordinary people keep on saving for years just for saving, wealthy people have a different strategy. They channelize their savings and invest them into schemes and ventures which would help them to earn more profits and further income to save more.
Saving to save means that you are just stocking away your money somewhere safe and not utilizing it. In this kind of situation, you will be able to earn mild profits and interest but not to the level that it makes you supreme rich.
Investing your saved money in ventures such as real estate, the stock market, mutual funds, etc. where you can expect a sumptuous ROI on your investment is an advisable step on your road to being rich. People may find it risky to invest in stocks or mutual funds as it is a fluctuating market. But well planned and well-researched investment always bears fruitful results.
Ways to save money:
While pondering on saving and investing smartly, we are automatically led to the question of how to save money. Saving money is often confused with preceding spending altogether. In our rush on how to save money, we often stop spending even on the things and items we may require at some point in time. Saving means that we spend in a manner that we prioritize certain important financial goals over the less important ones. Below mentioned is a list of ways on how to save money.
- Avoid using credit cards – Using Credit cards instead of hard cash or Debit cards, makes one a spend-thrift, as they start living and enjoying at that moment and stop thinking about money saving ideas. The interest accrued on the amount eats away most of your income rather than helping you to save. Credit cards should be put to use only during an emergency.
- Avoid online shopping – Another money saving idea is to restrict online shopping. While shopping online, one can very easily create an online account and save their card details on the retailer’s website. This makes them buy anything and everything they like at the very first instinct. Online shopping is more or less always devoid of the idea of necessities. We tend to keep on buying items unmindful of the fact that we need those or not. To avoid such situations, one must limit online shopping and should resort to offline shopping and that too as per their utmost necessity.
- Clear away your debts timely –It is always advisable to clear away all your debts timely as they may act as a roadblock on your path to success. You may start by paying away all your small time debts regularly and strategize plans to clear out your long-term ones. People who have undertaken student loans for the sake of their higher education are also advised to pay away their education loans in small amounts to avoid the extra baggage off their shoulders once they start earning money.
- Keep a tab on your cash flow – Another remarkable money saving idea is to keep a constant check on your monthly cash-flow. At the end of every month, try and analyze the expenses incurred and the savings made to incorporate any changes if necessary.
- Save to invest – The most fruitful way of saving money is to invest it somewhere safe and profitable where you cannot access it before the stipulated time. Saving money for the sake of saving is not at all a great way of saving money. Investing in long-term Fixed Deposits or schemes wherein the ROI is much better is what we can call a great way of saving money.
- Try to be a tax saver – It is always advisable to file your ITR timely and within the stipulated time to avoid any penalty amount which can prove to be an extra burden. People can also be tax-smart and invest in schemes and funds like PPF policies that may help them save their tax and also help them invest the difference somewhere beneficial. Though this may sound like a baby step to save money, still this may serve as a helping hand in the long run.
- Do not shy from taking risks – Stock markets provide some of the best ways to save and invest your money with windfall gains. This is another great way of saving money. The only thing that stock market cannot guarantee you is the risk associated with your savings. Knowing the fact that the stock market is a fluctuating arena, one can still expect large gains and returns out of your money. On the road to being rich, one must never shy from taking risks in the process of saving money.
- Try diversifying your savings – Even though it might not sound too great about taking long leaps and too many risks during your twenties and thirties, still it is also a great idea to diversify your efforts. It is always advisable to build or rely not just on one skill set or professional connections on your way to be rich.
- The same is true in the case of savings and investments too. One should never try investing all of their saved money blindly on just one single venture. Savings should be divided and categorized into various parts and should be equally invested in multiple beneficial ventures.
- Always have backup plans – Saving money for initial days or goals is never an advisable idea. One should always be ready for the worst on his road to being rich. Therefore it is advisable to set aside an emergency or contingency fund. An emergency fund which can prove to be beneficial in the time of extreme distress. People can set aside money equivalent to five or seven months of their present salary at least twice a year.
- Save money as a priority – There are millions of people who demand financial freedom, but only those few people who treat saving money as their utmost priority can make millions. Never ignore the fact that unless and until you are determined about saving you can never achieve what you dream of.
- Change your lifestyle – This may sound a bit tricky and difficult for you, but there can never be any gain without undergoing pain. Try moving to areas which provide you with all the basic amenities and facilities at a cheaper and affordable rate to avoid the burden of paying for an extravagant lifestyle. You can also opt for a smaller house or car as this may save a lot of extra money invested in those.
- Begin with buying items that are unavoidable and evade spending money on possessions you can live without. This may sound like a bizarre idea at the initial stages, but eventually, you will be able to feel the difference it creates when you start saving extra bucks.
- Try contacting experienced people and gain knowledge – It is never too late to learn and therefore one must never shy from learning from those who have gained expertise in saving and have achieved millions. There are many millionaires and rich people who are generous and kind enough to share their knowledge and experience with youngsters. Follow their footsteps to achieve your saving targets and move even closer to being rich.
- Start building new ventures and investing in new ventures – Try to channel your surplus saved money in some productive ventures like property and real estate and sit back to see your savings increase. The foremost step involved in investing your savings in new ventures requires in-depth analysis and market research. So it is advisable for you to do your homework accordingly and then channel your savings.
- Saving money and reaping benefits out of it is not at all a tedious task. A proper mindset and sheer determination are what it takes actually to start saving. Trying to be rich is more than just hitting the seven digits or eight digits mark. It is actually about changing your behaviour in a way that makes saving a fun activity. By making saving money the priority, one can move up the ladder towards actually being rich. Sometimes the hardest thing about saving money can be just the confusion of how to get started.
- We may find it difficult to figure out simple ways to save money and to use our savings to meet our ultimate goals. So it is also advisable to chalk out proper saving plans and follow them accordingly. Once that is done, you are ready to become a self-made young millionaire.