It's important to learn how to save money, otherwise you will never improve your situation. You may already have a high debt on your house and just want to start paying that off; the ideas in this article will help you do that as well.
This article is mainly for people that have no assets or savings and need to start at the beginning. It's important to have this basic skill. Without it, you won't learn how to manage money. So even if you got given a large sum of money then you wouldn't know how to handle it – if you don't have this skill.
So this is for the people that want to buy a house (or an asset) and have no savings to do so. This will teach you how to save. The easiest way is to save 10% (or more) of your income.
Your self-employed income won't be taxed until you do your tax return so you need have money put away for this as well.
So the best way to have the 10% saved, is to have your employer put 10% of your wage into another bank account, perhaps a bank that is not in your town or city and don't have a keycard or internet access to it. So the 10% just goes into their every week and you don't even know it.
Then you can spend the rest. This is a obviously slow process in order to get rich and if your income is $50,000, then it's just $5000pa going into it. But it's better than nothing.
So that's the BEST way of doing it. You know why? Because you don't see it so you can't spend it.
If you wait until your pay goes into your bank account and then transfer it yourself or have a direct debit set up, it's not the same.Then you need to work out how much you need to save if you have a goal, which you should have, since you read the chapter on goal setting.
If you have a goal to buy a $300,000 house in a years time then you will need the deposit and any closing costs.
Lets say you need $40,000, so break that down to weekly. Assuming your income is $50,000, 10% of that is $5,000, so you need to get an extra $35,000.Whilst it might sound silly, once you get a goal, and start looking at ways to find money, you will find that you have other ideas pop up and other means will come your way.
When this happens you need to notice them. There is a name for this but we will call it ‘luck' and when things start falling into place, and then take up all the opportunities that come your way.
If your goal was a house in 1 years time – now you are on your way to buying your first house. If you have a house already then you are now paying it off quicker. Why do you want to pay it off your home loan quicker?
The reason you want to do this is that you can use the equity – that is the difference from what you owe and how much it is worth, to buy another house – to rent out – or future investments. Wealth isn't built by owing lots of money, you need to start paying it off. Then you start building the equity.
The reason that you want to buy another house is that in the long term it will give you asset growth and an income in the form of rent.
You need the asset growth and income to make yourself a millionaire.
OK now back to savings. Here's another idea or additional way.
Drop all your coins into a jar at the end of a day. Don't tough the jar.
When it's full, take it to the bank and collect the money.
Don't spend it on a night out; transfer it to the out of town bank account.
Another way is to actually save on your day to day expenses.
Stop buying a daily coffee.
Don't take the car to work, and catch the bus.
Shop at the largest shopping mall in the lowest socially-economic area closest to you.
Why? Because the supermarket there will be cheaper than the ones in middle-class areas.
Make your lunch at home and take it to work, this can save you $50 a week, and guess where the $50 a week is going? Out of town bank account.
Stop going out to movies and dinners.
Cut up your credit card/s if you have them, and never use them again.
If you need the credit cards numbers to buy things on the internet, then get a MasterCard or visa debit card.
Pay them off as soon as possible and never, ever use one again.
No one I have seen with multiple credit cards and balances carried forward every month are wealthy.
As for points? Who cares you won't be taking any plane trips until you are wealthy.
Watch your utility usage, take shorter showers, don't use heating or cooling devices unless you have to, turn lights off, watch less tv – it's rubbish anyway and you need to get a good nights sleep so you can go cleaning at 230am anyway. (See how having extra jobs/income sources is going to save you money in other areas?)
Don't have a mobile phone unless you need one for business. If you want to talk to people, tell them to come and visit you.
Don't have anything that is costing you money, that isn't going to help you make money.
Think is this going to help me make money, if not get rid of it, don't buy it or don't use it.
Sell it on eBay.
Food: don't buy junk food, you will lose weight and it's always higher price than fruit and veggies.
Fruit and veges is usually cheaper in the outer suburbs that are near fruit and veggie growing areas, so shop there.
Maybe it's cheaper to live out there as well, so maybe move there.
If you rent get the cheapest apartment or house, and get someone to share with you or rent out spare rooms.
If you have a mortgage, then you need to start paying it off, if it's too high and it's an okay time to sell, sell the house buy something cheaper that you can pay off.
Rent out any spare rooms or space that can be rented.
Pay off your home loan fortnightly if it's a variable loan.
You will save money.
If you are on a high income, look into loans where you income can go directly into it.
If you don't need your car – sell it.
If you can catch a bus or train to work and you decided that lawn mowing and cleaning businesses were not for you, then sell it.
You can buy one later when you are rich.
If you need to go somewhere that a train or bus can't hire a car.
I could go on further about finding ways to save money, but you get the idea, look at everything you do and cut out what is not required.
You don't need cable TV, I don't care who you are.
If you want to save money get rid of it.
I know people whose loans are in arrears, and yet when you look at their bank account statement, they have internet, mobile phones and cable.
Clearly watching repeats of sitcoms is more important than keeping your house to some people.
You might think but if I get rid of this or that or stop going to a movie every week with my girlfriends or go out drinking and spend $200 on Saturday night you will become friendless and everyone will mock you at work because you didn't watch the 9 hour 2 and half men marathon on cable.
Look at your friends, or the next door neighbours or the co-workers.
Are they rich?
They could have the latest car, and a big screen tv and go out in the latest clothes three times a week, but if you can figure out their salary and they don't get up at 230am to go cleaning, then they are basically one step away from broke.
If you want to be rich you have to do things different from anyone else, otherwise they'd all be rich.
If they don't have a couple of investment properties, and they have to check the balance of their bank account at the ATM before they buy their lunch, they aren't rich.
You need to find new friends that are like you.
Wealth-minded people who are rich or want to be.
Sometimes these people will let you in to an idea, or a property development or a way that they make money in which you can benefit.
Whilst you friends are just concerned if you are wearing the right clothes out to the club tonight.
Most people are one step away from broke and you don't want to be like that and that's why you are reading this book.
If you wanted to be one step away from broke then you wouldn't have bothered reading this.
So you need to save money and you need to look at ways to cut down your spending, even though it may have increased with the extra incomes, now is the time to ‘seize the day' and ‘make hay while the sun shines', to put all the extra money to good use.
Yes, if you do increase your income you can just spend it and impress your friends with the latest big screen TV and electronic devices and you didn't need to put it on a credit card either.
But this is not the point.
You are making money so that you can become wealthy and if you follow my simple advice, then you are more likely to become rich.
And saying to your old party-going, latest gadget buying, trendy friends that you are now a millionaire in 5 years time is going to sound pretty good.
Sure they laughed at you then, but when they are kicked out of their house for not paying rent of mortgage and you have 5 houses and can buy a big screen TV with cash, then you will be the one laughing.
So you need to start saving money, and then looking at all the ways you can save money.
No pain, no gain.
So you might be reading this and you don't waste your money now, you just don't have enough coming in.
The only way to improve your situation is to increase your income.
If you don't have the money to buy a mop or vacuum cleaner, or you don't have a car, then you will need to have a smaller goal.
I would suggest get second job, or find a higher paying first job, and then start saving so you can start up your business.
If you can't afford to save as you have too many debts, let's say you have personal loans and credit cards and are already behind in these payments then you really need to earn as much money and pay these off.
There is no point savings money if you have $80,000 in unsecured debt at 20% interest. You need to focus, and pay it off.
If you do have a car on finance, make a decision whether you need it so that it can earn you a second income, or is it better to sell it and reduce your debt.
And rip up your credit cards right now and never get one again.
Saving money is the most important thing that you will need to learn, whether it's buying cheap food or putting away 10% of your pay every week, if you have nothing saved up now, you need to learn how to do it.
Saving money is the most important lesson to learn, because you can earn all the money you want – if you don't save it, then you will never be wealthy.