Every generation can benefit from the money-saving strategies of this millennial. Richard Meadows, a business journalist who is now in his mid-twenties, started out with nothing.
In fact, he started out with less than nothing.
Five years ago, Meadows calculated his net worth – and the results weren’t pretty. “It was a negative number,” he wrote on his blog Deep Dish. Between debts and expenses, his savings and assets were totally depleted.
But he began scouring the internet for topics like the early retirement community and the the financial independence movement, to realize that life didn’t necessarily have to amount to tirelessly working only to remain in the red.
So at the tender age of twenty-two, Meadows decided he was going to focus on saving. After making the necessary lifestyle tweaks, learning to live on less than he earned, and educating himself on ivestments, he managed to save half of his income in three years. All in all, it amounted to $100,000. Once he reached six figures, he quit his job and bought a one-way ticket to Bangkok. Now he’s traveling the world and working as a blogger.
It sounds like a dream come true for many. So how did he do it?
The Money-Saving Strategies this Millennial Used to Save $100,000
What was the secret behind Meadows’ ability to save so much money in just a few years? He told CNBC Make It that committing to the following two money-saving strategies unlocked the key to his financial growth.
Track Your Progress
Meadows writes on Deep Dish that monitoring your net worth is “the number one tool for real financial success.”
Without measuring the progress, you have no feedback loop. There’s no real way to get an idea of how you’re doing. By tracking your net worth and consistently recording the amount you earn versus the amount you spend, you can keep a balanced checkbook and figure out where to cut corners.
There are plenty of apps you can use to help make a budget. But you can also open up a spreadsheet to start. As long as you are recording the amount you owe, spend, and earn, you’ll start cultivating the awareness necessary to master your money.
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Of all the money-saving strategies out there, the second most important for Meadows was automating his finances. And it isn’t just the savvy millennial that can’t speak highly enough of its benefits. Many early retirees and savvy savers say that putting their money on autopilot is the key to their success.
Why is it so important to automate your finances? Because it eliminates choice. It’s very easy to get distracted by big numbers in our bank account without accounting for all of the bills that we have to pay at the end of the month. If we are responsible for paying those bills ourselves and not automating the process, the tendency is to begin to feel as though we have more money than we actually do. Then one month of unpaid expenses quickly turns into three months, and before you know it, you’ve dug yourself into a hole.
Meadows shares this tip. Set up your bank account so that the day after your paycheck lands, a certain percentage of that money is automatically send into an untouchable account. Then use that money for any expenses you need to pay each month, as well as whatever money you are saving.
Can you commit to these two money-saving strategies? Before you start automatic your accounts, get more inspiration from this man who became a millionaire selling potato peelers.
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Data Source: deepdish.com, cnbc.com