Saving money
At the start of each year, i like to reflect on what i have accomplished mentally, physically and financially. In this business, financial improvement can be seen as the most important. In other words, be more wealthy than the previous year. Now, this can be liquid or assets. Having more of either will result in you being more wealthy.
This is one thing that I know i have done very well in 2007. In my bank I have roughly 15x the amount I did exactly one year ago. That’s a pretty massive jump! Whilst, I am pretty sure I won’t leave 2008 with 1,500% of improvement (it would make me a millionaire) it definitely is a very motivating thing to watch your wealth grow. Really, in 2008 i would be happy with a 100% increase of my personal wealth. Whilst that would mean me making the same as i did in the previous year, it shows that i can sustain my income. I’m not saying that i am aiming to earn the same, I will strive to get as close to that 1500% as possible! But, i will not be disappointed one bit if i don’t come close to this at all.
I have placed the majority of my discretional earnings of 2008 into a savings account. Being fortunate enough to get nearly 7% interest on the money in this bank each year, I definitely get motivated to put this money away. It’s definitely tough to put your hard-earned (in some cases, “easy-earned”) cash into a bank, where it shows up as a figure. However, it is a neccesary step towards achieving financial freedom.
Here are some quick tips for saving money that i have found successful:
- Don’t think too deeply into the money - Consider this, you just sold a website for $100,000. You have so many choices! What will do you with this money? Well, first you should obviously treat yourself. You worked hard to earn that, and you should definitely let yourself know that you appreciate it. But, you don’t want to see that money all go down the drain. You want to see it multiply, make that money work for you. Otherwise you will most probably end up back in square one.
So, by not even thinking of it as money - you will easily be able to deposit it into the bank. As hard as it sounds, there are ways of helping yourself and it will help yourself in the future. One good way that i find helps is not to have the money in the form of cash at all. I know that i would end up spending the money if i had it in cash with me. It’s just sitting there, asking to pay for something. Keep it as a number in your bank, keep away the temptation. - Act quickly - the longer your money is sitting around, not in the bank, the longer the temptation is there and you are not earning interest on the money. Just take that small move of sending the money into your savings account.Then, watch the money work for you.
- Imagine the possibilities! - Calculate how much the money will earn you in compound interest once it has been in your savings account. This is a great way to calculate how much money it will make you and a great reason to deposit money.
Many people will say that there are better forms of making your money work for you than depositing it in the bank. And, i couldn’t agree more. There are ways which have a chance of giving you a significantly larger return on your money. Such as the stock market, or investing into a company, which i have started to try. However, these carry a large amount of risk along with them. Putting your money with the bank is probably the best way to have your money work for you with the least risk.
Build a solid foundation, then take the risks.
first!
Great advice Josh, I have never been one for saving but this year I am planning on starting some savings so I have something to fall back on if anything bad happens. Something for security purposes I guess.
The main tip I am going to take away with me is to ‘Act Quickly’. Usually I end up spending the money before it gets anywhere near my bank.
Keep up the good work.
Andy
Josh:
As a fellow 15-year-old web entrepreneur, I know how tempting spending that hard-earned money can be. What you have to remember is that although you DID earn the money, you do need to have a place to put it to gather enough interest to not drive you insane.
I used to keep everything in a Chase branch local to me…with a lowly 0.03% interest APY. The highest interest I could possibly gather was 6% with a full CD deposit, something I was not willing to make at the time. However, there is a decent middle ground, as I have discovered: ING Direct. That or HSBC will give you the best APY for your money (~4-5%) without the conditionals of a CD.
Jason
JRB Computer Services
http://www.jrbcomputerservices.com/
Hello Josh,
Just read about you on Nate’s blog. Glad to see your doing so well online.
fifth jon!
@Andrew
Acting quickly is definitely something i also try to apply myself.
Yes, the present is the best time to start saving. That’s one of the main reasons i do it, for security. If you ever decide to take on full time webmastering, you should really have at least enough savings to support yourself for 6 months. Glad you took something away from this post
@Jason
Yes, I try to use a couple of banks to spread out my money. I actually have three bank accounts, two are for saving. 4-5% will give you a nice return on your money. Try to calculate how much you would earn on the amount of money you have, or would predict yourself to have.
@Adie
Hey dude,
thanks for checking my blog out! Nice to see new readers. I’m a fan of netbusinessblog, i actually had a $7,500 bid riding on it when the site was for sale.
Keep up the good work!
Nice job on saving your cash!
While 7% is good, the more you get the higher you’ll be able to demand.
I want to hit 1 million in liquid assets to be able to invest into a fund that has given nearly 30% returns to the investors for 9 years. Problem is you have to invest a minimum of a million and it’s pretty exclusive.
Just think about those returns though
~Jonathan Volk
http://www.jonathanvolk.com
Hey Jonathan,
That investment opporunity sounds awesome! Something i will definitely be interested in for the future. I’m sure you’ll be ready to invest in that soon
30% is definitely an amazing return to an investor.
That’s the sort of passive income i’d love to get into in the up and coming years.
[…] Lees het volledige artikel bobumId=”1635″;bobumTracker(); […]
Great post Josh.
One thing I will say is this;
As you get older and take on more financial responsibilities (running a car, paying your bills, rent, having a girlfriend….believe me they can be expensive, and so on) you realise that sudden financial shocks can take effect. The mistake I foolishly made for a good 7 years is the lack of planning I did for the future, with my money. At age 20 nearly 21 I’ve seen how much I’ve made, how much I make now, and how much people are making from putting their money into the right things or just letting it sit there gathering interest.
Just a word from experience, never…ever…spend up.
Great advice and great blog but wait til the tax man finds you!! All those undeclared earnings will return to haunt you, trust me it happened to me. My advice is to get your folks to file tax returns and channel the cash through an adult. At 15 you’re not legally eligible to have this sort of income. Your call.