Why you won’t save yourself to a million dollars.
Here’s what you can do instead to get there faster.
Saving money is essential to having a good financial life. My parents always told me, save your money for a rainy day, you don’t want to end up on the streets without a single dollar. Those words stayed with me along adulthood and they never changed. They were right, saving is important but it’s not the only thing. It’s only one piece of the puzzle.
I like to see personal finance as an Attack and Defend strategy. You defend by cutting expenses and saving your income from your day to day job. You attack by creating new income sources and wealth building machines. You don’t want to work in something you don’t enjoy do you? Millions of people forget about the second part of this strategy and therefor forfeit their ability to create new income sources and default to trying to save their earning to reach their financial goals.
I’m here to tell you that doing only the defend part of this strategy is like running fast on a treadmill and going nowhere. Life is not always consistent and predictable. Unexpected expenses always come up and they will happen to you as well, if they haven’t already. Let’s take a look at two examples with fictional individuals, Fred and Winston, with similar situations but different financial strategies.
Fred works as a banker Monday through Friday and earns approximately $50,000 a year. He goes to work neither excited or apprehensive but just does enough to finish the job and come back home. He does this every work day and spends his earnings on bills, dinners, and has just enough to save a few hundred in his savings. Let’s say he saves $200 every month and by the end of the year, he saved up $2,400. The new year arrives and his car breaks down one day after work. The total cost is $1,600 to fix it up. Well, Fred just spent 9 months worth of savings on fixing his car. Now he only has $800 in his savings.
Now let’s take a look at Winston who works at Target full time and earns $30,000 a year. He also works Monday through Friday. Winston has his bills to pay and has a little left over to save every month. He saves $100 a month for a total of $1,200 at the end of the year.
Now, Winston also has another source of income after his day job. He buys and resells shoes in his free time and collects a decent profit from each sale. Let’s say Winston earns an additional $400 from his shoe flipping business. Winston now saves a total of $500 ($100 from his day job and $400 from his business) at the end of each month. By the end of the year, he now has accumulated a grand total of $6,000!
Winston is a great example of someone who also incorporates an Attack strategy in finance. He found a way to grow his earning potential through a small shoe flipping business.
In real life, many people find themselves comfortable with their monthly paycheck and call it day. There’s absolutely nothing wrong with this either and I’m not implying run out and start flipping shoes for profits. If at the end of the day you’re happy and content with your current financial health then don’t change anything.
But if you’re unhappy with your current financial health and you feel like you’re not where you want to be with your money then it’s time for a change. Don’t overthink this part either. Look for things that you’re already good at and use that as a starting point to make some extra money. Maybe you’re really good at shooting videos or photos. Create an instagram and start promoting your work to find potential clients.
The key here is to start fast. Don’t over analyze what you could do, just find something and start with it. The biggest way you’ll find success is by doing what you have to do and be consistent. Make it simple as well, don’t overwhelm yourself with busy work, just start.
I’ve been through this many times, I would spend hours “setting up” my business and creating a website. Next thing I knew, I did not work on anything that would actually land me any new clients. Prioritize your tasks and make sure to spend time on the things that truly matter at the end of the day, making money.
