The Threshold between Wealth Creation Destruction by mrsaadi

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Title:
The Threshold between Wealth Creation & Destruction

Word Count:
709

Summary:
Every dollar that passes through your hands offers you the choice of
creating or destroying wealth for yourself.


Keywords:
personal finance,wealth building,saving,retirement


Article Body:
Wealth is simply the accumulation of money, and it can only be created by
the amount of money that is received and never spent. If you want to
build wealth, then anytime you receive money: don’t spend all of it. Sure
it is a very simple concept, but it is very difficult to continually
achieve. Luckily there are readily available allies to help you: find
some compelling reasons to start saving, build it into a habit, watch the
results of your efforts build, and set some financial milestones to
reward yourself.

Setting aside a percentage of any money that you receive is the best
method to follow through and build the habit of saving money. There are a
few misers among us who find saving easy to do, but most people want to
spend far more than is earned; let alone have the discipline of spending
less than what they earn. So it starts as an uphill mental and emotional
battle that gets easier by following through with the habit, and seeing
the results of your effort. Spending less than what you earn every week,
every month, every year, is the only way to amass money.

How much money should you set aside to build up savings? It should be a
percentage so that you automatically move it into a separate savings
account anytime you receive income, without exception. It is my
experience that the range of 3% to 10% is the most successful starting
percentage for people who continue saving over long periods of time.
Saving only 3% is so small that it is nearly painless to even the lowest
income earners (this is actually where I began years ago). Selecting a
percentage under 3% accumulates to such a tiny amount of savings that I
haven’t heard of anyone sticking with it. And starting out by setting
aside over 10% is too painful for even high income earners to withstand,
because they are so accustomed to spending on every whim. As you
repeatedly save a set percentage rate, it will become more habitual,
automatic and expected. Then you’ll be ready to increase your percentage
rate. And the higher the savings rate, your growing pile of money will
create more motivation to continue to save

In the fragile first years of saving money, it can take only a single
wrong financial move to wipe out everything that you’ve saved so far. And
the most common wrong move doesn’t look like it when it is occurring.
This draining move can also start insidiously small and build a different
habit, the wealth-destruction habit. You know the problem: pay your
credit card balance in its entirety, every month, without exception. As
an example, if you haven’t saved money for a vacation before you depart,
and then charge it all to your credit card, there is a giant probability
that you won’t pay it off for a very long time. The credit card companies
know this and they are extracting interest dollars from you instead of
earning interest yourself. You’ve shifted to the dark side of wealth
destruction where it is more common for your credit card balance to grow
than shrink.

Let’s get back to building your wealth. Once you start setting aside the
savings percentage that you’ve decided and opened a dedicated savings
account, you need to closely review your account statements for
motivation. Reviewing the progress that you’ve made so far you’ll see how
you are moving toward financial goals can be self-reinforcing. And
another motivator is rewarding yourself by spending some money on
yourself when you’ve reached certain milestones. For example, you could
start with a goal of accruing $500, and reward yourself with something
meaningful; and then each time you double your amount of savings you get
another reward. My advice is to at least begin with a savings percentage,
even as small as my 3%, and allow this simple concept be of great
financial benefit to you.

								
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