10 steps to build wealth

When I think of how to build wealth, come to my mind the following words: consistency, common sense time and will.

Saving is not easy, it requires the commitment of everyone, needs to be systematic and be clear that only creates wealth over time (not overnight). On the other hand, depends only on yourself.

There are a number of steps, if met, would help many people to build wealth.

1. Spend less than you earn

It is the simplest rule of all. However, there are many people living beyond their means. Spending more than we earn, leads us to enter into debt and, once we go into debt, it is more difficult to save.

One tip that can help you to comply with this rule "does not work to pay that mortgage, loan, buy clothes / food, school expenses, dining out, holidays and then, if there is any money left, save" NO, first turn away an amount of my monthly income and then come the bills.

The best thing is to look like saving a percentage of your income. The amount you put it and adjust your monthly budget to cut spending and to save. It is important that you feel comfortable with the percentage of savings.

2. Sets the objectives you want to get

Everyone saves for a purpose (travel, canceling mortgage, education, retirement, etc ...). If we have a clear goal for which we save, we know two important things:

• Amount we need to save: the more money you save the more money you get in the future
• Time we have to save: The less time I have left to achieve the purpose for which I'm saving, the less I can save. The more time I have, the easier it is to design a savings plan
• Profitability: the more time is left for our purposes, the lower the amount I have to save and lower the returns that have to require my investment. If I wait 55 years to save for retirement, the less time I have to create that wealth, the greater the amount I have to save, and the greater the return that I will have to require my investment.

The wealth is only created over time. It is impossible to have eg the € 100,000 overnight, unless we win the lottery.

3. Save money every month

After determining the purpose for which I save and determined the percentage that will save every month we can invest those savings on a regular basis.

Most important is the discipline , want to save and be aware that we do not save for others but for ourselves.

Who wants to be a millionaire?

Normally, we associate to become a millionaire through the lottery. Few gambling games make you millionaire overnight and the odds  are very small.
 

However, the possibility of reaching one million dollars ( $ 1,000,000) through our savings is not as unattainable as we think. A regular savings can become millionaires someday. Of course, depends on three things:

• The age at which we start to save
• The amount we save periodically
• The return we get

This graph shows the monthly effort we should do if we are to $ 1,000,000 at age 65 depending on how we start to save:

* Average return on equity expected 7%

* Average return on deposits expected 3%

* The calculations do not take into account the inflation effect

Monthly savings needed to get 1 million dollars to 65 years depending on the age at which we start saving :

Get 1 million dollars is possible but involves a considerable effort, especially when we start to save.

If you are 25 years old , $ 381 monthly savings can be almost impossible, but think that if you started to work, you probably have few expenses. As time passes, the effort is reduced: 

• At 35 the same amount is equivalent to $ 268 / month from now, 
• At 45 amount to $ 189 / month from now
• At 55 amount to $ 133  / month from now

 * Estimated inflation of 3.5%

Another way to reduce the effort is whether we have saved a certain amount . For someone who had already saved $ 20,000. Savings per month that is needed to get 1 million euros would be:

 

Who Wants To Be A Millionaire?

Discipline. The key to create wealth

When I say discipline, I mean that the most important thing to save is to do consistently, so it is important that we consider as something aside each month / year for future expenses. It does not work to pay mortgage, loan, buying clothes / food, school expenses, dining out, vacations and then, if spare, save. NO, first turn away a lot of my monthly income and then come the bills.

The reason for doing it this way is because to be able to save, it needs to be regular and constant.