It seems counterintuitive, but there really are several “expenses” that will make you rich if you commit to putting them in your budget and making a habit of paying them monthly. So what’s the big secret? Check it out….
1. Paying for a Savings Cushion: We’re not talking the fluffy kind that sits on your couch. We’re talking about the financial cushion you can fall back on instead of debt. The best part is that the payback is immediate! You see the reward the minute you start allocating part of your paycheck to the savings “expense,” because you immediately go from no dollars to more dollars.
Tip: Your Money Coach can help you determine just how much you can put into savings and still have enough left over to meet the rest of your expenses.
2. Paying for More Money: Here we mean investments, where you can boil it down to giving money in hopes of getting more money. Okay, it’s more complicated than that, but when you invest correctly, you make bank! Just look at the “big wigs” on Wall Street. Making investing an expense in your budget will help you continually allocate money for purchasing assets that can provide a larger cash flow.
Tip: With any investment, there is a risk of loss, and gaining a huge return on your investment requires time and skills. The good news is, whether you’re new to investing or a seasoned pro, your Money Coach can help you sharpen your skills.
3. Paying Your Future: In other words, make retirement contributions a habit. It may seem like you’re giving money away because you aren’t using it immediately, but once you get to retirement, you’ll be glad you took the time to pay the “retirement expense” in your budget.
Tip: Your Money Coach can complete a retirement analysis to decipher how much you need to contribute to reach your retirement goals.
It all comes down to three little words: PAY YOURSELF FIRST. If you master that trick, you’ll reap the rewards.
So what does it actually look like to pay yourself first? To think of savings as a bill that you have to pay each month or each year? it involves timing and consistency, because the more you set aside now, the more you’ll have later. Let’s use “paying your future” as an example.
Say you’re 30 years old and you want to retire when you’re 70 years old, so you decide to start saving for retirement by making an annual deposit of $3,000.00 to a Traditional IRA with an 8% rate of return. It’s a nice thought, but you don’t make it a priority, so you really end up setting aside about $2,000.00 a year because, well, life happens. Overall, you would end up saving $559,562.18 (before taxes) over the next forty years.
Now say that you do the same exact thing but you make your retirement contributions an expense in your budget (i.e. a bill, if you will, that must be continually paid in full), so you actually “pay” the $3,000.00 each year. Based on the same time frame and IRA account, you would save $839,343.06 before taxes. That means you would be close to $300,000 richer because you made savings a priority!
Bottom line, it pays off to pay yourself first. To get started, talk with a Money Coach at 888-724-2326 today.
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