When we have much money, we have the tendency to rush to department stores and spend all we can, loosening up our expenses while slowing down on our savings. We tend to live like a King on a bed of money, thinking that we will never run out of it. However, what we miss out on the most is the fact that money is fleeting and we can lose them anytime.
So, if we don't want to lose everything that we have invested and end up in streets, it's about time to consider saving.
But, just how much do we have to set aside to keep our wealth? Daily Finance reveals "paying yourself first" is the secret to this.
Such concept is proven effective by David Bach, a simple man turned millionaire at the age of 30, when he related how saving the 20 percent of your income can do magic.
"Today, my wife, Michelle, and I each strive to pay ourselves the first 20% of our gross income," he shared.
"That may sound like a lot, but because I've worked up to it gradually over the course of fifteen years, it's become our 'new normal,'" Bach writes in his book "The Automatic Millionaire."
Surely, for some, saving up the 20 percent of your monthly income could be difficult considering the expenses you are obliged to pay each month, let alone the need to make both ends meet.
But, for a self-made millionaire like Bach, such idea isn't impossible to do. Starting with a little amount can lead to bigger savings.
"I was in my mid-twenties, and I wanted to make sure it didn't hurt. Within three months, I realized that 1% was easy, so I increased the amount to 3%," Bach added.
Meanwhile, The Easy Way To Start Saving Money affirms how effective the "pay yourself first" approach can be, dubs it as a "win-win solution."
Unlike the old way of saving money where you will only save what was left after paying all the bills, "paying yourself first" can help you spend your money guilt-free knowing that you have already set aside something for your piggy bank.
But, does this mean there's only a definite amount that you will save and it has to be the same amount per month and year? Well, Bach's personal experience shows otherwise.
The report shows he has gradually increased his percentage over time - from 1 percent to 3 percent to 10 percent to 15 percent, until he reached 20 percent. The saving, when it becomes a habit, just turns automatic and you will just be totally amazed how effortlessly the little amount you have started saving becomes bigger.
"This one little step will change your habits and make saving automatic. And that will put you on a path that ultimately will make you rich," writes Bach.
Daily Finance suggests that if 1 percent is what you can only afford to set aside per month, then it's better to start from there than not get started at all. It may sound cheap but The Every Girl reveals that the "pay yourself first" approach sets the foundation of your long-term financial success.
