The secret to becoming rich is really quite simple.
First of all you must spend less than you earn – Then you must invest the difference.
But don’t stop there – You then need to re-invest the profits that your initial investment created as well as the original investment. In time this will create a big enough resource that you will be able to comfortably live of the income that your investments create.
Does this sound a little bit scary or like too much hard work? Well don’t worry because all you need to do is to create some savings and investment strategies and the rest will fall into place.
The first step is to create a Savings plan that works for you. When it comes to saving money there are generally two different types of people.
The first type are people who are somehow able to save money without any great difficulty. They have good restraint when it comes to purchases and they always have a sock full of money somewhere. When they are ordered around and given strict rules to abide by they tend to want to rebel and do the opposite.
The second type of person needs strict rules and regulations to achieve most things. Left to their own devices they would happily spend all their spare money on a new pair of jeans or car. When these people are given clear rules they seem to be able to save money with much more success.
Which type of person are you? Do you need strict Savings and Investment Strategies to save money or are you at your best when you are given more freedom. To be completely honest I think that everybody could become a better at saving money if they applied a few simple ideas.
One of the best savings and investment strategies that I have come across is this.
Reward Based Savings System
The first step of this system is to actually create a savings plan. For instance you need to focus on some areas in your life where you think you could save some money eg.
Bring your lunch from home
Less alcohol from expensive bars
Cook your own meals
Cut down on snacks
Isn’t it fumy how most of the things that I have just mentioned would be beneficial to your life in more ways than just saving you money? The problem is that all of the above things are actions and pastimes that you really enjoy.
So is it realistic to try and cut these activities out of your life and expect to be happy just because you are saving some money?
No, I don’t think it is. What about if every time you saved money you simply rewarded yourself? Then you might actually enjoy saving money rather than growing to resent it.
For example if you were to give up smoking then I would suggest that you keep a tally of the money that you are saving and use a portion of it to reward yourself with something that you love but don’t usually get, for instance a massage or a night at the movies. This way you are creating a savings plan that will actually work. Why? Because you want it to work so that you can get your rewards. Too many people create Savings and Investment strategies that don’t have inbuilt reward systems. The best thing about a reward based saving system is that you really enjoy the feeling of saving money. Then if you are smart enough to invest the extra money that you are saving you will have begum your journey towards financial freedom.