Most of us—some secretly—would love to have some more of it in our lives. If we’re being honest, we’d really like to build wealth over time and eventually achieve economic independence, but micro-managing day-to-day decisions can feel like a frustrating full time job.
What I’ve learned, though, over the course of my own journey to money Zen, is that getting in the weeds with your money isn’t required at all. Through plenty of experimentation, I’ve learned that keeping just a few principles front and center makes all the difference.
I’ve also interviewed dozens of millionaires, and you’d be surprised to know that very few of them use spreadsheets, calculators, abacuses or slide rules to stay on the right financial track.
First, you need the right mindset.
Your Number One Job is to Grow Your Wealth
Rule No. 1: Never lose money
Rule No. 2: Never forget Rule No. 1
~Warren Buffett, The Most Successful Investor Alive
What can you take from Warren’s very simple advice? It’s easy, really. Shift your mindset to be about wealth building.
Take stock of all of the money-making and wealth-building resources that are available to you now: your employability, education, skills, physical and mental health, willingness to work, and ability in your life to take the time to work.
Realize that the natural process of life is that those resources go away over time. Now is the time to focus on building up the stores of money you’ll use later to support you and your life and your freedom of choice.
Real Life Example 1:
If you’re currently spending more than you make, getting into this mindset means lowering your overhead, culling expenses and being willing to say “no” today so you can say “yes” tomorrow. You’d propel yourself to a life condition where the money coming in exceeds the money going out.
Real Life Example 2:
In my 20’s, I always opted out of the company retirement plan savings, telling myself I’d wait until I had more disposable income. If my mindset had been about growing my wealth rather than growing my clothing collection, I’d have been making different choices.
Real Life Example 3:
In my role as financial advisor, I sometimes hear from people who are considering elaborate strategies to avoid income taxes—strategies that would end up costing far more to implement than they’d actually save on their tax bill! Paying taxes is a necessary evil, and while I’d love it if you became a powerful policy lobbyist who helped make the tax code a little less onerous, until then our job is to pay the appropriate tax and use the rest to build our wealth.
Real Life Example 4:
Telling yourself, “Saving seems daunting. It’s not like I’m in construction, I’ll just keep working.” Yes, it’s true that many retirees are enjoying encore careers, but you can’t just plan to work until you are 80. Your health might last that long, but you can’t guarantee it. Life just doesn’t work that way.
Front ending your goals is the way to go and that means putting the majority of your saving efforts toward saving for your own retirement, or your own financial future.
Get Used to Big Numbers
It used to be that it was a huge thing to be a millionaire, we all know there’s a mystique about it. But here’s the deal: if you want to live on $50,000 of income per year in retirement, you need about a million dollars in investments just to do that!
And then there’s price inflation which leads to you needing more dollars to buy the same things over time, so the numbers get bigger.
I think for some people this might be a huge shock, but it is the harsh reality.
It’s never too late to start saving, and through Your Rich Retirement Academy, I teach methods to save that are proven to be the most effective methods at having even people who start saving late in life to achieve their numbers.
We are living longer and healthier lives, and pensions and other alternate income sources of income are going away, so we’re tasked with building wealth in our personal economies that can sustain us for 25 or 30 years. That’s a long time to have your money providing for you, and that’s why I say we all need to get used to bigger numbers.
So what’s a minimalist to do?
I Don’t Do Budgets. I Automate.
The primary way I shifted my entire financial reality and locked in my economic independence is by automating my success. Students in my online courses have reported incredible breakthroughs in their financial lives by using this technique and I whole-heartedly endorse it.
I hate budgets. Automating your finances means no more…
• Paper bags full of receipts you haven’t categorized.
• Ridiculous stuffing of envelopes with cash and then constantly moving cash from envelope to envelope all month.
• Over-draft fees.
• Making yourself feel bad for eating out.
• Spreadsheets of expenses or backlogs of transaction downloads into Quicken.
I cannot over-state the simplicity and elegance of automating!
It’s amazing, it’s easy and (for me, at least) it’s fun. I know exactly how much money I spend and I know exactly how much money I can still spend in the pay period in order to stay on track to meet my financial goals.
I’ve been using this money magic for seven years now and I completely attribute my financial success to it.
What Automating Looks Like
I have a system of multiple accounts, one where my income gets deposited, and automated payments are made to each of 6 different accounts (yes, 6 accounts, including retirement accounts, and yes, they’re all free).
I’ve calculated my total overhead, by that I mean mortgage or rent, insurance premiums, gym memberships, Netflix, car payments and everything I’ve previously agreed to pay. Those charges come out of the deposit account.
Then I send my bi-monthly disposable spending over to another checking account. For the kind of spending where I’m making choices in the present moment (gas, groceries, clothing, restaurants, etc.), I spend only from that checking account, using that debit card.
And when that account gets to zero, I stop spending until my personal economy’s next payday.
It’s very easy! And I make it fun, I make it a game. It’s amazing how necessity really is the mother of invention.
I send automatic payments to my retirement savings, car savings, vacation savings and Christmas savings. Now that those stores of money have built up, my financial life is so drama free.
And other amazing things came when I shifted my mindset to wealth building and automated my money.
My experience of money used to be really painful, I seemed to be plagued with these large unexpected costs that would decimate any savings I had managed to build. But those costs just don’t seem to show up anymore.
It used to be I’d go to the mechanic with my BMW convertible that I purchased on loan and get a $3,000 bill. It bummed me out, but it never shocked me. Now, I go to the mechanic with my 8 year old Lexus that I own outright expecting to pay $800 for new brakes and I come away with a $49 bill for machining a little part that was making a big noise.
This kind of thing happens all over my life—now that I’m being responsible with money it seems to have gotten gentler with me.
So, again, automating your finances really is the key to setting up financial systems that are repeatable and documentable and have nothing to do with your Money OSTM. If you’ve got places in your financial life that you need to tweak or change, it shows up right away when you calculate the amounts that go into these various accounts.
Again, you can certainly do this on your own, I encourage you to, and I teach this entire system comprehensively in Your Rich Retirement Academy. There are handouts and diagrams and we spend two weeks setting it up so that it works for you and keeps working for you throughout the program, and your life. You’ve got to make the plan and then work the plan and then notice your peace of mind to know the money magic is working.
Now let me hear from you in the comments below. What’s the best thing you’ve done for your own personal economy? If you leave a comment, we’ll send you a FREE INFOGRAPHIC that shows you exactly how to automate your finances.