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Do you want to become rich? Do this thing. – The crazy fool

Most of us would like to be rich, but achieving significant wealth usually requires significant effort. Yes, you can go there with a very lucky lottery ticket, but do not count on that. The odds of winning the Powerball Jackpot are about 1 in 292. million. (The odds of winning just $ 100 are less than 1 in 14,000.)

So pursue this dream more realistically, using a proven method: living below your means.

A hand is shown, his finger pointing to the millionaire word.

Source of the image: Getty Images.

These four words are essential for achieving all kinds of financial goals, such as saving a down payment for a home, sending a child to college or the opportunity to retire comfortably, with minimal worry about your financial security. Words can even help you become rich.

The power to live below your means

In reality, everything is a simple matter of calculation: spend less money than you invest. This leaves you regularly a surplus that can be saved and invested to help you achieve your financial goals.

For example, if you are earning a salary of $ 5,000 a month, try to save at least $ 500, or 10%. This may not lead you to the goal of retirement, however, if you have not saved or invested for much of your working life and are not too young. For many people, a savings rate of 15% or even 20% is no longer necessary.

The idea of ​​reducing this amount so much could be extremely unattractive, but think about what this might bring you: the table below shows what you could accumulate over different periods if you save a lot of money and your investments increase on average by 8% per year. . (The stock market has had average annual earnings of almost 10% over long periods of time, but over a period of time it could be much lower or higher.)

8% growth for:

$ 10,000 invested annually

$ 15,000 invested annually

$ 20,000 invested annually

5 years

$ 63,359

$ 95,039

$ 126,719

10 years

$ 156,455

$ 234,682

$ 312,910

15 years

$ 293,243

$ 439,864

$ 586,486

20 years

$ 494,229

$ 741,344

$ 988,458

25 years

$ 789,544

$ 1.2 million

$ 1.6 million

30 years

$ 1.2 million

$ 1.8 million

$ 2.4 million

Data source: author.

A bit of deprivation now can yield massive dividends later. Better yet, you must not suffer while saving a large portion of your income. There are many relatively painless ways to save.

How to live below your means

Here are some ways to save money regularly:

  • Eat less often. Of course, you can save a lot if you stop completely to go to the restaurant. But cutting your habit of eating in half could make all the difference. If you dine out twice a week and spend an average of $ 50 each time, that's about $ 5,200 a year! Cutting it in half can bring in $ 2,600.
  • Cut this cord. You do not have to wince every month by paying a cable bill that keeps increasing and that often costs you over $ 100 for a multitude of TV channels (which you do not even look at much !). Just switch to streaming and you may save half. Popular delivery options include Netflix, which recently costs between $ 9 and $ 16 a month, Hulu, which recently costs between $ 6 and $ 12 a month, and Prime Video from Amazon, available for Prime members, who mostly pay $ 119 a year (about $ 10 per month).
  • Shelter a vehicle. It will not work for everyone, but if your household manages to get by with a car or truck, you could save a package – on gas, repairs, maintenance and insurance – not to mention parking, tolls and even traffic tickets.
  • Take the time to generate additional income. If you think creatively, you can find ideas that interest you, such as trying to sell photos on online sites, do independent editing or sell sweaters you knit.

Millions of Americans live beyond their means, which leads to debt and a lot of financial stress and hardship. Do not be one of them. Live below your means – and if you do it aggressively, you can accumulate considerable wealth.

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