There’s a misconception that people who become wealthy these days somehow got there through special knowledge, sophisticated investment strategies, or (most cynical of all) by “stealing” from other people. All of the above things are untrue, and are demonstrably untrue thanks to Chris Hogan’s study of over 10,000 American millionaires.
The steps to achieving wealth are fairly simple: stay out of debt, have an emergency fund, pay off your house early, and invest a substantial portion of your income into good funds. That’s basically the formula! No gimmicks, secrets, ivory tower theory, or anything of that sort.
But there is one particular thing that financially successful people do their entire lives that helps them get to that point. It’s something that 70% of Americans do NOT do regularly. Any ideas what it is?
I’ll give you a hint: it begins with the letter B, and many people cringe when they hear this word…
That’s right, the budget, or monthly spending plan, is the tool that successful people use to propel them to their goals and into better and better financial shape. This tool is a guide that people use to tell their money where to go each month. They write it down each month, whether on paper or on an app like EveryDollar, and actively manage their finances.
It is simply impossible to make financial progress without a plan. If you’re aiming at nothing, you’ll hit every time. The budget is a ways of setting goals for your money each month so that when the end of the month rolls around, you’re not desperately waiting for your next paycheck.
What I and other coaches have found is that when our clients begin to do a budget each month, they realize there is more money available than they previously thought. Whereas they were living paycheck-to-paycheck, one incident away from a financial meltdown, the budget sets them towards a better position because they are striving towards a goal each month.
When you track your money, you suddenly realize where it’s going. Many people cannot even tell you where their last paycheck went. If there’s $100 in cash lying around, it will disappear and no one in the household knows what happened to it.
That’s called being normal, but I don’t teach being normal. I teach a plan that helps people take control of their money. When my clients take control, they realize they have more than they originally thought, and suddenly they’re able to start paying off their debts, saving an emergency fund, and eventually investing for retirement. Over a working lifetime, the saving and investing adds up until they become the next Everyday Millionaires.
And all along the way, they’ve used the budget to propel them into prosperity.
Never made a budget before? Let’s talk about how to get started!