Saving money isn’t easy—you’ve got bills to pay, kids to send to college and make the weekly payroll of your staff. Sometimes it’s a wonder there’s any money left for you. You know you’re supposed to be saving money, but you’ve got to pay the bills first. There’s an answer that is easy and takes no discipline on your part.
Whether you are self-employed or employed by a law firm, you should deduct at least 10% of your pay automatically with your firm’s retirement plan. With automatic withdrawals from your salary, it’s like you never had the money in the first place and the money is growing in your retirement plan free from taxes. You save money automatically and the power of compound interest builds wealth for you in your sleep.
Pay Yourself First
Let’s say you start out making an annual salary of $52,250 at age 25 and just for argument’s sake, your salary never increases. If you deduct 10% of your gross income beginning on Day One and you earn 6% on your savings, you will be a millionaire by age 55…even if you have no other savings and you spend the rest of your salary. And if you earn 12% on your savings, you will be a millionaire in your late forties. How beautiful is this? You can become a millionaire on a modest salary with no conscious thought about saving—everything’s done automatically for you.
The key to growing wealth automatically is to set up a plan to automatically withdraw at least 10% of your pay into a retirement account. This is a fool-proof way to make just about anyone into a millionaire with little thought or effort.
