During difficult economic times, people usually point fingers at various sources of their financial distress. Those who live at or below the poverty line, or those who are the working poor, may feel as though the rich are in control of the systems that keep them down.
There is not one single cause of poverty, just as there are multiple ways to grow rich. However, there are specific lessons that the rich teach their children that the poor do not. What is it that the rich know, that others do not? The formula for growing rich is in effect very simple. Earn more than you spend, or in other words, save money.
Pay Yourself First
Saving money sounds great, but how do you save when you do not have enough for basic needs? The basic rule that rich people follow, even when they have millions in the bank, is to pay themselves first. What does that mean? Paying yourself first is the best way to save. The golden rule of saving is to always set aside 10% of any earnings. In time, you will not even miss that 10%. The rest of the money is yours to budget as you like.
Live Within Your Means
Another rule followed by those who are truly rich is to not live a life that you cannot afford. It is very easy to lose yourself in consumerism and the temptation to overspend, particularly when credit cards are easily available.
Most of those who have grown rich through hard work have learned the art of delayed gratification. If you consistently spend more than you earn, it is time to review your financial situation. Make a 6-month plan to get your finances back on track, either by reducing spending or increasing earnings.
A Savings Plan
In order to motivate you, do a rough calculation of your monthly savings amount. Multiply that by six to determine your savings after six months. Over time, your nest egg will grow due to the power of compound interest.
For a powerful example of compound interest, if you were to invest $3000 per year starting at age 20, at a moderate interest rate, you would have close to three quarters of a million dollars at age 65. This is something that anyone can do if they start early and stick to the plan. Even if you start at a later age, the power of compound interest can still do wonders for your nest egg.
Have Confidence and Faith
Having confidence and faith in yourself is the most important thing that wealthy and successful parents teach their children. The children of successful parents learn very early that everything is possible. On the other hand, children of parents who struggle financially learn that money is hard to come by and difficult to accumulate. Regardless of how you were raised, however, we all have the power to attract the life we desire. You just have to learn to believe that it’s possible.
Now is the time to set yourself on the road to wealth and prosperity. Remember that even during times of economic crisis, opportunities to grow rich present themselves. Stay the course, maintain your savings plan, and have a little faith.