Get Rich Quick vs Steady Saving
And the winner is….
by Megan Pacheco
Have you ever found yourself daydreaming about winning the lottery? I know I have!
Oh, the thought of being able to pay off the house, take much needed, extended vacation and of course become crazy generous with family and friends and other worthwhile causes! Yes that’s the ultimate life scenario…
The only problem with it is that the statistics prove otherwise.
According to research, winning a mega jackpot could make you more likely to go bankrupt. Or how about this one: 70% of the lotto winners will squander their winnings in just few years! There is also an emotional toll that lottery winners often face and it includes being taken advantage of by friends and family, becoming a target of scams and lawsuits and relational breakdown.
In light of just those few stats, I say there is a better way to build wealth. It’s the steady plodding principles and it’s captured beautifully by these few proverbs:
“Dishonest money dwindles away, but whoever gathers money little by little makes it grow.” Proverb
“Steady plodding brings prosperity; hasty speculation brings poverty” – Proverb
Steady plodding and gathering little by little is a much safer strategy for both growing wealth and making sure that those resources will provide for our financial needs long-term.
So here are few tips for those of us who get caught up in that “just a little bit more” trap, to hopefully turn us into patient steady plodders…which in laymen’s terms simply means long-term savers!
1. Talk to your bank and ask to automatically transfer, twice a month, a certain amount of money into a savings account that has restrictions put on it. Pay yourself first, then use the remainder to live on. This is how you will slowly build financial reserves. If you don’t have much disposable income, start with $10-$20 twice a month.
2. Find your spending waste. Every one of us wastes money. Some of us waste more than others so the key is to track your spending close enough to find out where your waster areas are. Is it eating out too often? Is it sodas or lattes? Clothing? Whatever IT is, by carefully examining your spending you’ll surely find extra $25-$50 each month that could be reassigned from waste to savings. Many of our Mvelopes users find that they can recover up to 10% of their income just by finding waster areas.
3. Less expensive services. How long has it been since you re-quoted your cable, cell phone, home insurance, car insurance, etc…? I bet you that as if you do a little bit of asking around you can find a less expensive substitute for at least one of those services. If you do, commit to set the difference aside as savings (instead of course consuming it on monthly basis)
4. Stop using debt as an excuse not to save. Unless you start building saving reserves you will have a very hard time with breaking your debt cycle. Using budgeting software like Mvelopes can help you find ways to save even while paying off debt. Start small, just start and keep at it.
We could go on and on but you get the point. So build wealth slowly…after all many of those who became financially independent used this very technique.
Living on less than we make and saving and investing the rest is what will help us get and stay in the place of financial freedom.