No, I’m not talking about some super secret way I’ve found to trade penny stocks or how I’ve found that selling knives door to door has made me rich. Getting rich is something that most people want to do, the only problem is the want it now. Not tomorrow or 30 years from now, we all want to win the lottery today or ‘get discovered’ and be making it big in Hollywood or New York. The unfortunate reality is that very few of us will get rich in this way. We won’t win the lottery and unfortunately our acting careers won’t take off. Even if we climb the corporate ladder, we’re likely to find the top rung full of more bills than we know what to do with. Listen closely, for I’m about to tell you the real secret to getting rich: small actions over a long period of time.

Little actions

Rome wasn’t built in a day, as the expression goes. As much as I’d like to be able to deposit $10,000 into my bank account next month or see my retirement fund DOUBLE, it’s just not going to happen. What I am able to do though is deposit a couple hundred each month into my savings account and watch my retirement grow by 5-10% each year. I can also make a budget and stick to it, spending less on clothes or eating out and more on putting money into my bank account. I can turn the thermostat down a degree or two and turn the lights off when leaving the room. I can carpool to work a couple times each week and pack my lunch, instead of eating out. None of these things will make me rich overnight and none of them will make me rich by themselves. However, it’s the sum of these small actions that will ultimately make the difference.

Long period of time

“Compounding interest is the eighth wonder of the world.” – Albert Einstein. Pretty cool quote from a pretty smart guy. The idea that you can earn interest on your money, and then use that money to earn even more interest next time is a game changer. Once you fully understand this concept, it will unlock for you years of using your money to make more money. A 5% return certainly doesn’t seem like a lot but that $100 will turn into $105 which will then be $105*5%. Over a long period of time, that will turn into a very large number. Bringing your lunch 3 times a week could save you $780 per year. Put that in a 5% investment fund and you’ll have an additional $57K by the time you retire (assuming you retire in 30 years). Cutting down my thermostat by 2 degrees could save me 10% on my electric bill. That could be around $10 each month, or $120 per year. By the time you retire? An additional $9k. The key here is that you’re not having this extra money by earning more, just by spending less. Imagine what it could be like with annual raises!

End Game

Most of us won’t get rich tomorrow, the next day or even next year. Some of us, those that practice smart budgeting and invest our money, will be able to retire comfortable, with $1-$2M in the bank. I’m planning on enjoying my $1-$2M. My secret? I don’t ever expect to be making a ton of money, and I certainly won’t be getting rich from my income. What I will do is save a fair amount of each paycheck each month, and invest it in various ways (real estate, the stock market, savings accounts). Over a long period of time, I’ll see that money grow and grow until one day I’ll be ‘rich’! That’s the real secret to getting rich right there, making smart choices for a long period of time!

Thanks for reading! Here’s another you might enjoy Ways to save $110 this month or a Penny Saved is a Penny Earned.

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Also, another YMF Money saving tip: Don’t just toss your old cellphones away…trade them in!