Start saving smarter
Learning how to save money like a self-made millionaire can mean the difference between stressing to dress and dressing to impress. It can help you retire younger so you’re able to see more of the world sooner. It can mean finally building that dream house. And more than anything, it can mean having the money when you truly need it.
But let’s face it: Not all of us are natural savers. We waste our money on frivolous supermarket buys we’re convinced we have to have in the moment. We don’t bother with high-yield savings or investment accounts. And we have a tendency to try to keep up with the Joneses. In other words, we could really use the help of a self-made millionaire who not only knows the tricks to getting rich but is also skilled at saving. Luckily, we talked to some financial geniuses who were willing to share their expert tips on the money-saving strategies all self-made millionaires share.
Whether you’re planning to retire at 30 or are opening your first savings account, these are the money-saving habits you should borrow from self-made millionaires to become one yourself someday.
They follow the 50-30-20 rule
Forget complicated budgeting or uncomfortable belt-tightening; the secret to saving big might boil down to three simple numbers. Kimberly Palmer, a personal finance expert at NerdWallet, says that many a self-made millionaire follows the “50-30-20” rule.
Using this formula, they put aside 50% of the money they earn for savings and necessities such as rent and groceries, 30% for lifestyle purchases like new clothing and 20% for fun activities like concerts or eating out. By regularly and intentionally setting aside a fixed amount of savings, the self-made millionaire builds a nest egg faster.
Ready to try it for yourself? To get started, download a budget app to help you divvy up your income accordingly. “You might find that with some adjustments, such as shifting your food spending toward groceries and away from takeout and restaurants, or cutting back on monthly subscriptions, you can take steps toward reaching your wealth-building goals,” Palmer says.
They automate their finances
Budgeting is a smart move, but there are times when it can backfire, according to nine-time New York Times bestselling author David Bach, the founder of FinishRich.com. “You’re too busy, and you will just get frustrated and fail,” he says.
Instead, self-made millionaires automate their financial lives so they can’t fail. That includes setting up a regular deposit into their savings accounts to be automatically withdrawn from their pay.
Bach also recommends using autopay for many of your bills, including car payments, mortgage payments and credit card bills. Doing so helps you avoid missing a payment and getting hit with those pesky late fees, saving you money in the long run. Just make sure to leave out any of these bills you shouldn’t put on autopay.