Yahoo Finance David Bach’s ‘One Hour Savings Rule’ and 3 More Easy Money Rules To Build Wealth
When you get into the habit of saving money, it can feel like a struggle, since there so many options available regarding what you can buy — and how convenient it has become to spend money. The good news is that there are various strategies for saving money to help you simplify the process to start building wealth.
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Here’s a look at a few easy rules from money experts to help you start saving to build wealth — even if you’ve tried everything.
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The ‘One Hour Savings Rule’ Explained
David Bach, author of “The Automatic Millionaire,” introduced this rule to help you save up and build up your wealth. The goal is to pay yourself first by saving one hour of your earned wages daily. While you may have heard of paying yourself first by setting funds aside from every paycheck, the goal here is to pay yourself first from the first hour of earned income in a day. The amount that you save will be your hourly rate for one hour of work.
According to Bach, the three steps for building wealth are:
Commit to paying yourself first.
Pay yourself first an hour a day of your income.
Make the entire process automatic.
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The key is to pay yourself — again, the first hour’s pay for the day — before you even pay taxes or anyone else. The best way to do this is to sign up for your company’s retirement plan. Since most people will pay the government first, you can get ahead by implementing this strategy to ensure your funds are instantly working for you.
If you consider an average eight-hour workday, most of the earned income will go towards taxes, housing costs, transportation and everything else. The goal is to pay yourself, from the first bit of work that you complete, to set aside money for your future instead of just paying everyone else.
More Easy Money Expert Rules To Build Your Wealth
There are other easy money rules that you can follow, if you want to build wealth without feeling restricted.
‘Unlimited Spending’ in One Category
Ramit Sethi, founder of I Will Teach You To Be Rich, believes that you shouldn’t completely limit yourself when trying to save up and build wealth. Sethi follows the rule of “unlimited spending” in one category to allow yourself flexibility when saving up.
Instead of feeling limited with your spending choices when building wealth, you can set aside the funds to ensure you can afford to treat yourself. The goal is to find one category where you’ll indulge while cutting back on other areas.
You want to leave enough space in your budget to be lenient with one category. The good news is that this category can be anything you want it to be. For example, if you want to build wealth while still going out for food occasionally, you can make dining out your one category. This means you’ll save ruthlessly in other areas while allowing yourself to enjoy your restaurant meals.
This rule works for building wealth because you don’t feel restricted, since you can still spend money on what brings you joy.
Have a Written Plan for Your Money
Dave Ramsey believes that you have to plan for building wealth if you want it to happen — it won’t be an accident. The goal is to have a written plan for your money in the form of a budget. Ramsey’s National Study of Millionaires found that 93% of millionaires had a budget they stuck to, and it’s clear that most people need some sort of system to follow when it comes to money management.
The key is to start every month by giving every dollar earned an assignment, from expenses to savings. Then, you have to do your best to stick to this budget to build wealth. You won’t be able to build wealth if you don’t stay on your plan. This is why it helps to create a realistic financial game plan and follow it, without feeling like you’re missing out on life.
Live Below Your Means
Suze Orman believes that everyone should follow this one financial rule if they want to build wealth. Orman wants you to get clear about your wants and needs so that you can live below your means. As simple as this rule seems, many will struggle with following this advice, since spending money is easier than ever.
Orman feels that many people live paycheck to paycheck because they fail to automate their savings, and they love spending too much. You should strive to build new habits to find joy in saving, instead of always spending money.
Closing Thoughts
If you want to build wealth, there are simple financial rules that you can implement in your life to ensure that you stay focused on the goal. Whether you apply one of these rules or combine them, you can create a system that allows you to build wealth.
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This article originally appeared on GOBankingRates.com: David Bach’s ‘One Hour Savings Rule’ and 3 More Easy Money Rules To Build Wealth
