Increase the Velocity at Which Your Money Grows: Ways to Save

Increase the Velocity at Which Your Money Grows: Ways to Save

save money

What do I mean by “increasing the velocity of money?” By saving more you can re-invest your hard earned cash and your money can work for you! Save more today so that you can reinvest and work less tomorrow!

A Money Metaphor:

Imagine several circles, one inside of the other (see the photo below). If you are living month-to-month and only receive earned income,  you are running around the outer most circle.

It takes you longer to go around the circle than someone who has saved some of their earnings and re-invested the savings into income producing assets. In a prior blog post, I talked about the importance of earning income in the “capital gains” tax bracket.

As you develop more streams of income, especially streams that are in the lower capital gains tax bracket, the smaller the circle you get to run around.

Concentric_Circles

The goal is to get to the smallest circle. The smallest circle is the level at which your assets pay for your living expenses and you no longer need to work. Your job title becomes “asset manager” i.e. you manage your own assets.

Each individual or family has a unique number of circles in their diagram.

This is because each person has a unique dollar amount at which they can “comfortably” live off of. You should run your life like it is a business.

After all, you have an income and expenses just like a business does. The more you spend, the more you will have to make to cover those expenses.

 

What is your Financial Freedom Number:

 

Now, let’s figure out what your number is so that we can backtrack to find out how much monthly cash flow you will need in residual income to cover your monthly expenses. 

Open up a blank excel spreadsheet and list all of your bills and how much they are each month.

It should include costs like: rent/mortgage, car payments, gas, utilities, phone bill, health insurance, car insurance, groceries, entertainment, etc.

Once you have added up all of your living costs, subtract it from your current monthly income. Are you even? Do you have money left over? Are you running a negative?

Be honest with yourself, this is an exercise that no one needs to see except you. Start a journal/excel spreadsheet called “My financial Report Card”.

Start by tracking each month’s income and expenses. You can’t change what you don’t track. Knowing where your money goes is the first step to saving, and then investing.

Remember, the way to increase your passive income stream is by saving money and re-investing it into income-producing assets. Click this link to access a few easy tips to increase your savings: 54 Ways to Save.

How to Become a Life Long Student: 

In another blog, I explain how you can crush books like there is no tomorrow! I teach you how I am able to take in a book every week and a half. 

What is the secret of success? Finding someone in the field that you look up to who has done it already, deconstruct what they did, and follow in their footsteps.

If you are currently stuck and don’t know how to find the motivation to get pumped up in the morning, I highly recommend reading or listening to “Awaken the Giant Within“. 

Tony Robbins is one of my favorite speakers and authors. He is a motivational guru!!!

Success Tony Robbins

In this book, you will learn how to find your purpose, and how your current habits are preventing you from achieving these goals.

Tony teaches his readers how to unlink bad habits and replace them with ones that will help you move in the direction. 

He teaches you to dream big, and how to translate those dreams into attainable goals. Moreover, Tony preaches MASSIVE action and gets you excited about attaining your goals.

Emotions are the fuel that drives your passion and gets you to take the steps each day toward your goals. 

One of my life mantras is, “If you try every day, you will achieve it”, supported by “What have you done today to achieve your goals?”. 

The Marines have a saying, “There is always a way to overcome an obstacle… Over, around, through, or under!”

Only you can fight your battles and achieve your goals. Moreover, this is because everyone else is too busy fighting their own battles to be the general spearheading the campaign to achieving your dreams for you.

As Tony would say, “Take massive action now”.

Get started building the life you wish you had! Become a life-long student and begin by reading or listening to “Awaken the Giant Within“!

Get Motivated With Your Emotions and Take Action Now: 

 

I wanted to share a quick motivational video produced by the Youtube channel “The Law of Attraction”. One of my daily routines is to listen to a motivational video while I get ready in the morning.

 

 

 

Your brain is like a computer, and your thoughts are the software program that is running. What kinds of thoughts and emotions are you feeding your brain??

Are they positive and optimistic or depressing ones?

For the majority of people on this planet, financial freedom is one of their goals. So let’s delve into what that really means.

What Is Your Number? How to Calculate How Much Money You Need to Retire:

 

In another blog entitled “What is Your Number? How to Calculate How Much Money You Need to Retire, I give a summary of Tony Robbin’s awesome new book. He talks a lot about financial freedom and has had the opportunity to interview 50 of the most successful financial experts alive!

Tony compiles all of his interviews and writes a book called “Money Master the Game”. Some of the iconic financial experts that Tony got to hold a one-on-one interview with are Warren Buffett, Carl Icahn, Ray Dalio, and Steve Forbes!

Tony Robbins has one of the most inspiration rags to riches stories out there. Moreover, I believe what he preaches in the way of how to attain financial freedom. In these books, he really sets forth a great starting platform from which to launch your financial success.

After all, there must be a reason why he has a net worth of over $500 million.

I highly recommend reading or listening to, “Money Master the Game”. If you would like to read a shorter version, he wrote a follow-up book called, “Unshakable”.

I have listened to both books, and think that they should be required reading for high schools across the nation. Yes, he does talk a lot about his own personal story, but points are best made when they are anecdotal. Tony is a long-winded speaker and writer, but he tells you these stories so that he can connect with his audience and vice versa. 

I will never understand why our education system doesn’t teach our children how to properly manage their finances.

Maybe financial freedom is only meant for those who really want it…

Those of us that go the extra mile to be lifelong learners and read/listen to books on the weekends. I’ll never know the answer to this issue, but what I do know is that in order to become successful, you must be a student of success!

Fund Your Retirement Fund by Cooking at Home:

 

One of the ways I like to save money is that I meal prep twice a week. I have become so efficient at meal prepping that I can make breakfast, lunch, and dinner in 1 hour for the next four days. I used to cook dinner every night, which would take an hour for each meal.

That is four hours of cooking over four days, but now I can prepare four meals in one hour.

That is a 6-hour saving over the entire week! Why am I bringing up cooking in a blog about saving money? Because cooking your own food can create huge savings!

Lets do the math if you were to eat every meal at a restaurant or take it to go: A breakfast would cost you $7, lunch would cost $12, and dinner would cost $16 (I am being conservative here. I am sure many of you have eaten a $20+ dinner).

Let’s add all of that up and then multiply by 30 days per month. That is $1,050 per month on eating out! I currently spend about $60 per week on groceries, but I am a relatively small individual, so say you spend twice what I spend on groceries… Say $100 per week, that is $400 per month. That is less than half of what you would spend on eating out!!!

Additionally, you know exactly what is going into your meal, which can help you eat healthier!

What can you do will all of this extra money? Max out a Roth IRA with $458 per month, and start listening to books on audibles.

Build the life of your dreams! Become a life-long student and begin by reading or listening to “Awaken the Giant Within“!

Do you know any easy ways to save money? Post a comment below!piggy bank

Photo Credits:

Circle 

Piggy Bank 

Save Money Flicker

 

Financial Loopholes: Increase Your Wealth

Today, I will be writing about “money fast passes”. Ever wonder what the “loopholes” of the rich are? Well, I am about to share them with you! You can use this blog series to help you increase your wealth and up your financial IQ!

The government uses incentives to get individuals to perform tasks in two areas (owning a company and real estate) through tax breaks in order to increase free market transactions.

This means that the government gets people like you to perform tasks by giving them tax incentives so that it does not have to perform these functions. In short, the government wants you to provide jobs and housing.

There are 3 types of income

  1. Earned income
  2. Passive income
  3. Portfolio income

 

Earned income is taxed at the highest rate. Earned income is the income that you receive when you go to work. The government wants individuals to save their money and reinvest. When individuals re-invest their earned income (which they have already paid income tax on) they get to pay “capital gains” tax on any income or interest that the investment makes. Currently, the capital gains rate is 15%-20%.

The key to investments is that your money works for you, even while you are asleep!!!

Saving Money is a Daily Habit and a Lifestyle Choice:

 

Someone who earns $1 million and spends $1 million is still living month-to-month. The first step to investing money is finding the money to invest by saving.

You have to be willing to look at your current lifestyle and see how you can reduce your spending, to increase your savings.

 Saving and investing rich dad poor dadLearning tax loopholes and finding investment vehicles isn’t the hard part. The truly difficult part of investing is finding the money to invest.

That means living below your means so that you can set aside the funds to start investing. Remember, saving and investing requires strategy. You must be a student of the game!

To learn more about highly effective morning routines click here. To be successful, you must be a student. Humble yourself and strive to learn one new concept each day. I read a book every week and a half. That is around 30 books per year! You can do it too. Don’t have time to read? Listen to books on Audio! 

If you haven’t readRich Dad Poor Dad” by Robert Kiyosaki, it’s a great place to start!

Passive Income and Capital Gains Tax Rate:

 

Ever wonder why Warren Buffet only pays 17% in income taxes (according to a Forbes article, see resources below)?

It is because most, if not all, of his income, is derived from income streams that are taxed at capital gains rates.

He owns many companies, which allow him to write off expenses and roll losses forward (all to come in future blog posts). For now, let’s focus on how to get our income into the capital gains tax bracket.

Passive income usually comes from rental properties or a business that you own equity in.

Portfolio income (think papers in a portfolio) is typically derived from stocks, bonds, mutual funds, index funds, etc.

You must have savings in order to invest and achieve these higher levels of income streams.

AND I know what most of you are thinking… “I don’t have extra money laying around!”.

 

Where to Find Money to Start Investing:

I am going to give you one $5 example, which you can then apply to every $5 increment in your personal daily spending habits.

Say I were to buy a $5 coffee every morning before work. That is $5 x 5 days per week x 4 weeks per month x 12 months=$1200 per year on coffee!!

One last tip, learn what it takes to go out and achieve your goals by reading this article. Get started building your dream life today!

Be a student of success, and start by downloading the “Rich Dad, Poor Dad” book on Audibles. It has become one of the cornerstone books in finance for beginners.

What else do you spend $5 on that you could save? Have any easy tips for saving money? Please share your thoughts with the community by commenting below!

 

 

 

 

Photo credit 

investing 1