Today’s post is an interesting one as we discuss how to achieve financial freedom on a dollar a day.
Maybe you are like me, and want a financially free life. Perhaps you want to make or save a few extra bucks. Or what if you just want to manage your money better. No matter what your goal, it all starts with a single unit of currency, and the difference between the rich and the poor starts with the way they view that unit.
This may seem like a waste of time to learn. And truth be told, when I started reading this stuff I thought it was a waste of time too. Only after reading countless books, going to dozens of seminars and listening to tons of CD’s, did I begin to understand this simple concept: before people become wealthy they start with a shift in their thinking, in the “way” they view money. The shift is usually quite subtle at first. Just think that one change in a thought process could have the potential to make you rich. And it all starts with that one unit of money.
Most people who look at dollar can’t see past the ink on the paper or the mark on the coin. They will see it for what it is, a dollar. People who are prosperous however, view this same dollar much differently. They view it as a seed. They see it as a seed for endless potential. Just like an acorn or apple seed. Except this is a money seed.
A money seed is a special kind of seed. Just like an acorn has the power to grow into a mighty oak tree, a money seed has the power to grow into a money tree and bear fruit for years to come. You must make sure to take care of your seeds though. You may pick the money fruit but be sure to leave some seeds to plant for the following years. For you may never know when a hurricane or crop killing bug might come around.
If you destroy an acorn, the potential tree inside dies with it. This is the same with money. When you waste a dollar, the potential for that dollar to grow also dies. Now you will need to earn that dollar again just to have the same potential back. This is why it is so important to preserve and take care of your dollars.
The important thing here is to look at how much that dollar could potentially be worth. If you put that dollar into a bank account that was not affected by taxes and fees and wanted it to grow to a million it would take a while. Figure 1.1 below shows what this would look like.
Figure 1.1 -The Time It Takes For 1 Dollar to Turn into A Million
Source: Multiple Streams of Income p.2
Not very excited? Me either. I don’t have 468 years either.
Let’s now look at some ways to turbo-charge the time it takes to get to 1 million dollars.
OK, let’s try and make this a little less depressing. Even though a million dollars may sound like a lot of money, it actually is not that hard to get to (depending on your age). Figure 1.2 shows how 1 dollar a day could turn into a million.
Figure 1.2 – How 1 Dollar a Day Turns Into 1 Million
How about that! A dollar a day turns into a million dollars in the span of a normal lifetime. The average college graduate would only need to save a dollar a day to become a millionaire at retirement. I know what you might be thinking. Well, that’s all good and well but where do I get a 15 or 20 percent rate of return. The banks are only giving 3%. I will cover investment tips and strategies in future blog posts showing you how to get double-digit, triple-digit and even infinite returns on your money. For now, let’s stick to just basic understanding of money.
It is so simple to become a millionaire. Just like it is simple to lose weight: all you have to do is burn more than you eat. Well with money all you must do is re-direct a few miss-spent dollars to investments. The following chart (figure 1.3 shows how long different amounts of money and returns take to turn into a million dollars)
Figure 1.3 – How Many Years It Takes for Different Amounts of Money Turn into a Million Dollars
You can see by the chart how important it is to start early. I know it might be difficult but “the only place that success comes before work is in the dictionary”, Vidal Sassoon. Take time to study these charts and find out where you are right now and where you would like to go. Then you can say “I know how to manage my money”. Read other blog posts to get some more ideas of how you can either save more or increase you rate of return. Remember, you instantly become richer the sooner you save.