Building up a financial buffer is important, especially in the long run. Regardless of whether you are investing in stocks, or simply setting aside money.
Many people find it hard to save money. They feel they don’t earn enough to save, or have important expenses that need to be taken care of first.
Others feel that the world of savings or investing is too daunting, complicated or high effort to maintain.
All of the above are just excuses.
With a salary of 3000 a month, you can retire a millionaire.
Rule 1: Do something, get started now
No matter what you decide to do, you need to start now. You can keep planning to start saving at some point, but that moment you are planning will never arrive.
Saving a small amount, is saving infinitely more than nothing. Ask yourself:
If I had saved 25 euros a week (about 40/month) last year, how much money would I have extra now?
The answer is of course 52*25=1300 euros.
But if you would have done this for the past 5 years, and you got a 5 % interest rate you would now have: 7542 in savings
If you go bigger, say 80 euros a week, after 30 years you will have: 290,204.79 euros
Keep in mind:
- 25 a week is making your own lunch instead of eating out
- 80 euros is cooking yourself and making your own coffee as opposed to buying/drinking out
Even if 80 is too much now, getting in the habit of saving will help you build a pile of money that will grow itself.
Rule 2: Tax yourself
In the Netherlands you pay a lot of tax, if you freelance or own a company you know just how much. of every euro that comes in you pay:
- 21% VAT
- 30-50% income tax
More than half of the money coming in goes to taxes. So what if you would apply a personal tax to yourself? Say 20%? Or 30%?
Applying such a personal tax will grow your savings/investment account steadily. And as your salary/income increases so will your savings.
You can even ask the company you work for to pay 80% of your wages to your account and 20% to your savings.
Money you don’t see if money you don’t miss.
Example: retire as a millionaire at 3000 a month
For fun, let’s assume you make 3000 a month, or will in the future and apply a 30% self-tax. You save this between your 25th and 65th.
When you retire at 65 you end up with 1,369,920.16 euros.
So yes, you would retire a millionaire. With a wage of 3000 a month.
Now imagine making more than 3000, or working beyond 65…
If you are serious about building up some money, we recommend reading “Money – master the game” by Tony Robbins, “I will teach you to be rich” by Ramit Sethi and “Rich dad poor dad” by Robert Kiyosaki.