I’m guessing that a lot of people feel financial freedom is out of their reach. 

Well, I beg to differ with them.  I believe it is possible to save one’s income to become rich.

You don’t even have to make a ton of money to become a millionaire.  All you need is the desire to do well with your finances and a little creativity.

Believe you can save your income for financial freedom

Does this already sound like a late-night television infomercial?  Well, it’s not.  However, it is hard to write about becoming wealthy without starting to sound that way.

Stick with me here and I’ll show you that my plan for achieving financial freedom is not a fly-by-night scheme.  In fact, it is very realistic for most of us.

Becoming a millionaire is relatively simple.  It isn’t altogether easy, but it is simple.

Take a look at the chart below.  It assumes a 10% rate of return on your investments.

If you save $500 per month for 30 years earning an average return of 10%, then you will become a millionaire.  It is as simple as that.

So, what if you plan to retire in less than 30 years or what if you don’t have $500 a month to save?  Well, as the chart above illustrates, you can still build a respectable nest egg.

For example, if you invest just $300 per month for 25 years, you will have almost $400,000!

Of course, the earlier you start the better.  Look at the figures in the 30-year column compared to the 25-year column.  Waiting an extra five years makes a big difference.

If you are in your 20s or 30s, I implore you to start a regular investment plan now!

Two critical components to achieve financial freedom

The two most important things you have to understand in order to become rich are:

• You have to pay yourself first and
• You have to make your savings automatic

Paying yourself first means you budget an amount to save every month and live on what’s left over.  Most people do the opposite and wind up broke.

When savings is your top priority, you schedule to have money automatically deducted from your paycheck or checking account every month to be invested.

This strategy for savings ensures that you follow your plan which guarantees that you will become rich.

Okay, let me add one caveat to my guarantee.  There are always exceptions, aren’t there?  You have to wisely invest your money to earn your planned rate of return.

How to invest to save income for financial freedom

I believe growth stock mutual funds are a good way to invest for retirement.  I know that the stock market has taken a beating lately, but historically, over the long haul, the market has performed very well earning around 10%.

Of course, as many are quick to point out, past performance is not necessarily an indicator of future returns. 

I invest my money in mutual funds for a few reasons:

• By definition, they are diversified.
• Good mutual funds, have a long track record of solid earnings
• They are easy to understand and purchase

A good investment strategy for getting rich is boring.  It grows slowly, but steadily.  This is not exciting, but it is dependable.  I believe in the K.I.S.S. principle.

Things to point out about saving income for financial freedom

I hope you will take a few moments and study the chart above.  Again, it is simple, but very revealing.  Look at it carefully and absorb all it tells you.

Let me point out a few things to observe:

1.  The savings scale stays between $100 to $500

I kept the monthly investment low on purpose.  I wanted to illustrate that even a modest amount of money can grow into a big result.  Let me reiterate that it does not take a six-figure income to get rich.  You just have to practice some basic financial principles and then let compound interest do the rest!

2.  The years scale shows an investment horizon of 20 to 30 years

Investing for wealth is a long-term proposition.  The longer you have to invest, the easier it will be to become a millionaire.  Of course, it is possible to save a lot of money in a short time, but you would likely need to significantly increase the amount you were saving monthly.  Hopefully, you are in your 30s or 40s and still have time to easily get rich.

3.  The chart doesn’t lie.

The chart is the whole reason that I wrote this post.  It is a reminder to me and hopefully to you too that it is possible to get rich.  If you believe you can, you will.  Yes, it takes some discipline and a plan, but with just a little effort, time and money you can become a millionaire!  Isn’t that encouraging?  It is to me.  The chart is my vision for the future.

Are you going to become a millionaire?

I end with the question I asked in the beginning.  Becoming wealthy is a decision you can make.  What do you choose?

For many, they will continue a consumption lifestyle, pass that legacy on to their children and end up in the poor house (i.e. a facility that accepts Medicaid).

I have chosen to finish my life better than that and to help my kids get off to a better start in handling their money.  My plan isn’t glamorous, but it will work.  I will be a millionaire!

What say you?  Are you going to become a millionaire?

Photo by UKDevon