Here is some professional advice on building wealth. As you read it it’s quite simple and it’s not bad advice. However, I suggest an even simpler approach.
Save and invest on a well diversified basis first, at least 10% of your gross income. Do not use credit cards unless you absolutely always pay them in full before incurring any interest (you will be known as a deadbeat in the industry-that’s a good thing). Spend whatever the hell you want as long as you follow the first two rules and after you have built an emergency fund in addition to your 10% long-term retirement savings.
And I would add one additional rule, increase that 10% over the years as your income grows and do so before you increase spending.
Simple uh? Oh yes, this means your lifestyle will actually be based on what you can afford … I guess that’s the downside.
So, you want to be a millionaire? Conventional wisdom dictates that to save money, you need to squirrel away as much as possible while drastically reducing your spending, period. While there is some merit to that strategy, the smarter way to grow your wealth is to cultivate careful spending habits that will allow you to maximize your savings without cramping your style.
Here are four smart spending habits to help you save your first million dollars.
1. Categorize your expenses and monitor your spending.
2. Avoid emotional spending.
3. Choose and pay off your loans strategically.
4. Invest wisely.
via 4 Smart Money Habits to Help You Earn Your First Million Dollars.