Hey guys I hope by now you are more informed of what tools you need to defeat personal finance issues you may be having. Simple fixes now can pay off tremendously later, for example starting early with investing, paying yourself first, and having a sizeable emergency fund. All of these things should be a natural component of our personal finance world, but an important factor some of us forget to do on the journey is to spend the money in the right places. For example imagine you could spend money to make money, would you do it? Of course you would.
A high percentage of people value things over security, because primarily they do not understand the concept of what it is to save. When you finally get it you will see that savings is a means to an end. Having a steady influx of savings added to your accounts will:
- Allow you to have freedom later
- It will allow you to give without feeling strapped
- It can ultimately open up many options for other future investment ideas
- It will consistently pay you back, interest and dividends so that you do not have to work
- It can be a safety net for you if social security gets abolished
But before you can even be considered in this level of monetary freedom, you have to spend money to make money. I have said this terminology before and I do not know how many of you read the first post I wrote, but this rings true with any financial expert’s advice. The secret is you have to forgo spending money in the wrong places. How can you say to me I deserve to buy this or have that thing, when you do not even have a retirement account or an emergency fund. This is the backwards thinking that has many people living paycheck to paycheck. Keep saying you work hard for the money, because you will work hard forever if you keep spending the money the wrong way.
The natural progression to this post is now for you to ask, What is the right way to spend money to make money? AH HA! you have come to the right place! Buckle up your safety belts because this might be a bumpy ride. Forget about making excuses until you can reach certain goals listed below.
Spend Money Here:
- Retirement Accounts – 6-10% of Income (401K for most of you/IRA if self-employed)
- Emergency Account – 1-5% of Income (This will allow to avoid debt)
- Stock Accounts / Index Funds / ETF’s – 2-5% of Income (Play Money)
Spending money in the wrong way is a serious issue many people have that we can all change by following the simple steps above. I know for a fact that we have a spending issue because the savings rate in America is 3-5% of income. That is just sad and unacceptable.
Imagine if your boss was a spend thrift person like you, and this year’s bonus was axed, how would you feel? Pissed and feeling like your hard work was not valued, well that is exactly what you are doing when you do not spend wisely. Adding to your savings goals is money that you will potentially need for next year if your boss spends your bonus money again.
Guiding money systematically to retirement accounts, brokerage accounts, and online savings accounts before you can get your hands on it will help you achieve this mantra of spend to make money. – Rich Uncle EL
In total you will be allocating about 10-20% of your monthly income to these 3 goals depending on how your cash flow situation may be. Granted you might have to cut back and sacrifice here and there, but believe me it will be worth it.
Other Reads on this same Topic:
How to Save Money for Retirement if you don’t make Much Money
5 Tips to Get Rich and Build Wealth
Robert Kyosaki famous quote:
The main reason people struggle financially is because they have spent years in school but learn nothing about money. The result is that people learn to work for money but never learn to have money work for them
Comment if you are against saving money and why? Comment if you are for spending money to make money.
Rich Uncle EL
