Yahoo Finance I’m a Self-Made Millionaire: Here’s the First Thing I Do With Every Paycheck
When you get paid, you likely have to dedicate a certain portion to your bills and basic living expenses before you can do anything else. Then, there are different views on what steps to take when saving or investing with every paycheck. If you’re building wealth, we’ll explore options for allocating a portion of your paycheck to investments.
Be Aware: 5 Unnecessary Bills You Should Stop Paying in 2024
Explore More: 7 Unusual Ways To Make Extra Money (That Actually Work)
We spoke with a self-made millionaire who shared what she does first with every paycheck she receives. We’ll examine how you can apply this advice if you’ve considered changing your spending habits.
Sponsored: Credit card debt keeping you up at night? Find out if you can reduce your debt with these 3 steps
Allocating Funds For Investments
“As a self-made millionaire, I focus on wisely distributing each paycheck, mainly into diverse, growth-centric investments like real estate and collectibles such as vintage cars,” said Brenda Christensen, CEO of Stellar Public Relations.
This self-made millionaire has grown her wealth by investing in these specific assets with every paycheck. In this case, the goal is to invest a portion of every paycheck that yields future returns. Focusing on allocating money that yields returns is one of the best ways to ensure financial security in the future.
Trending Now: 10 Expenses Most Likely To Drain Your Checking Account Each Month
Christensen is a proponent of investing her earnings into vintage cars and unique properties. She looks for properties with waterfront access and highly desirable vintage cars, both makes and models, that could still be used on the road. Depending on available opportunities, she takes a portion of every check to save and invest in this space.
Christensen elaborated, “This strategy includes exploring new investment avenues for potential gains, allocating funds for emergencies and self-improvement, ensuring financial stability and readiness for growth opportunities.”
It’s worth pointing out that this is a distinct investment strategy that may not fit everyone, but if you can make it work, there’s money to be earned.
Why Invest First When You Get Paid?
“It’s fun to ‘drive’ your investment because this approach makes investing more engaging, blending passion with discipline,” noted Christensen.
While you may want to spend your money on short-term goals or other opportunities, the goal is to plan for your future accordingly. If you invest a percentage of your earnings into assets that can grow, you create better opportunities for your future self.
How Much Does She Invest?
“As for determining how much to invest, it’s essential to start with a solid understanding of your financial health and goals,” shared Christensen. “A general guideline is to consider investing a certain percentage of your annual pre-tax income.”
While there isn’t a specific amount that everyone should dedicate to future investments, you should start by running some calculations to see how much you would need to invest accordingly. Every investment requires a different capital level to get started. When you’re first starting, you may want to focus on building up a savings account to ensure that you have the funds to invest in more expensive assets down the line.
“While the exact percentage can vary based on individual circumstances and financial goals, starting with an average of 10-15% can be a sensible approach. This recommendation accounts for the importance of investing in one’s future while balancing immediate financial responsibilities and savings for emergencies,” said Christensen.
Start with 10% of your income and increase this if you can cut expenses. The goal is to have a portion of your current earnings go towards assets that will bring you money in the future.
Why Isn’t The Average Person Doing This?
What’s stopping someone from doing this? We inquired about this to see if Christensen had insights into what’s stopping people from taking similar steps with their paychecks.
Uncertainty Around Investments
“A significant factor is a prevalent fear and uncertainty surrounding money and investments, largely due to the lack of financial education in public schools and early education settings,” noted Christensen.
When it comes to investing your money in assets, there are inherent risks involved that could deter the average person. While you have to take calculated risks to make significant returns, it’s intimidating.
Lack of Financial Tools
“Many people grow up without the tools or confidence needed to make informed financial decisions,” shared Christensen.
If you didn’t grow up with financial confidence, you may be hesitant about investing your money into assets you hope will pay off one day. Making financial decisions can seem daunting when you don’t grow up with abundant money.
We also can’t ignore how expensive life has become, making it more difficult to allocate a portion of your earnings towards investments.
How Can You Invest With Every Paycheck?
If you want to start investing from every paycheck, here are the steps you can take.
Step 1: Looking Into Different Investments
You want to decide how you’ll be investing your money. The investments can include any of the following:
Education that will help you make more money.
Your retirement account so that you can retire sooner.
Real estate so that you can build wealth quicker.
Other investments that you can find.
You spend time researching investment ideas to decide how to invest your money. It’s important to remember that many schemes exist, so be cautious when looking up investments because you don’t want to fall for a scam.
Step 2: Cut Some Spending From Your Budget
Once you figure out what you want to invest in and how much you can invest, you’ll want to look into ways to cut expenses from your budget so that you have more funds to allocate toward your assets.
You can start by reviewing your fixed expenses and subscriptions to see if there’s budgetary wiggle room. Then, review your spending habits to see if you have any addressable problem areas. The goal is to have the funds to invest in your future.
Step 3: Find Friends Who Will Hold You Accountable
“You can create a club with your friends and set goals together,” shared Christensen.
If you struggle to find internal motivation, you can make friends or join a social circle where investing is a priority. You want to be around others who are on a similar path. The good news is that with social media, there’s likely a group or gathering place for like-minded people. If you find those who will hold you accountable, you’ll have a higher chance of sticking with your financial goals.
Closing Thoughts
“It’s really important to have a passion for what you invest in and to make it fun. Invest in assets that you find meaningful or interesting. This goes with many things in life. If your heart’s not in it, it will be drudgery and likely fail.” said Christenson.
While this is just the path of one self-made millionaire, various insights from this story could be applied to your own life. If you start investing a portion of your earnings into assets, you could create passive income for yourself soon.
More From GOBankingRates
Rare Bicentennial Quarter Has Nearly $20K Value -- Plus 7 More Worth Big Money
This is One of the Best Ways to Boost Your Retirement Savings in 2024
6 Things You Should Never Do With Your Tax Refund (Do This Instead)
This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: Here’s the First Thing I Do With Every Paycheck
