So you have a steady income and a supplemental income already? Your making money and things are starting to look up? Great! Now don’t go wasting it on eating out, useless toys, or other wants.
Now is a great time to understand wants and needs. A want is something that you feel that you have to have but it serves no real purpose. A need is something that you have to have. A perfect example is that you want an iPhone 12 but need food for your family. This concept goes across the board for all things. At this stage, cut down on your wants. I’m not saying to live a boring dreary life, get those wants once in a while, but the key in this stage of your life is savings and investments. You have a goal, remember it!
The first step once your making some money is saving it. Now all over the internet people will tell you how much to save, or what percentage of your income needs to go into savings. I do not believe in that theory. My theory is simple and easy to understand, save what you can. Whether it be $50 or $500 a month, dedicate money to savings. In a perfect world, you build a budget, stick to the budget, and anything left over goes into savings. The reason I don’t like putting a percentage on that is because everyone has a different situation. Some people have $50 left after they pay bills and others have no bills at all. Save what you can.
If you need help building a real budget, check out the How-To Budget blog post and get started!
Your other concentration at this point is investments. It is my firm belief that everyone, no matter what situation, should be investing in their future. There are tons of ways to invest, IRA’s, stocks, bonds, real estate, etc. The investment I recommend for most people at this stage is in stocks and IRA’s. For those who don’t know what an IRA is, it is called an individual retirement plan and most banks and financial institutions offer it.
Individual Retirement Plans (IRA) are pretty much what the title says, a retirement plan. There are several different types and the best way to figure out which one fits you best is to talk to someone at your financial institution. The biggest advantage to an IRA is that it allows you to grow a retirement fund tax free or tax deferred. This is something that everyone should have if their employer does not have a retirement plan in place.
My other recommendation is investing in the stock market. No, I do not mean throwing punches on the trading floor of Wall Street like Jordan Belfort in Wolf of Wall Street. Thanks to technology, trading in the stock market has become something everyone can do right from their phone! There are plenty of platforms to use on your phone but my favorite is Robinhood. They do not charge for making trades, there is no minimum buy in, and it is easy to understand. This allows you to invest any amount of money and get started right away. We will have an in-depth blog post specifically on stock trading in the future.
Get these things set up, millionaires, and those following the million dollar mindset have many cashflow adventures and I would bet that all of them have savings and investments.
Like I said in my first blog post, making money takes time and effort. Well I forgot one, patience. The old adage “Rome wasn’t built in a day” stands true today. You are creating the foundation for success, the building blocks you will use to start your own empire.
Do not forget your goal and keep up the good work!