Most rich people I know got wealthy starting from scratch. If you think about that, it’s inspiring. It means that anyone can drastically improve their finances – including you. I don’t care how much money you make, it’s how much you save and invest that matters. But many people I know simply don’t save as much as they could or should. Well Pilgrim, we’re going to change that right now.
Of course, the most difficult part of this is getting started. It’s especially hard if you are having trouble making ends meet at the present. No worries.
My friend Jim Blankenship had a suggestion that can really help all of us get started on our savings plans. He says that you should start with any amount you like and just add 1% to your savings each month. If you do that the magic will happen. As you’ll see in a minute, Jim is right.
Why Save An Extra 1%?
Look at the chart below. Consider the left side of the chart.
This is what a hypothetical investor is doing now. Look at the blue chart. Susi our pretend investor saves $200 a month and she bumps it up 1% each month. (I don’t think Jim is suggesting that we increase our savings 1% every month forever and neither do I. But let’s just see what happens if you do continue that pattern for a while.) Back to our example.
So in month 2, she saves $202. In month 3, she saves 1% more than $202 – and that’s $204.01. In 5 years her incremental increases pump up her monthly savings to over $353. I don’t think that would be a stretch for many people over that period of time. But look how powerful it is. The right side of the chart illustrates what Susi would have if she kept her monthly savings stagnant at $200.
Can you save $200 a month right now? If not, how about $100? How about $50? What are you comfortable with? Whatever it is….get it started using auto pay and get it going friend. Then bump it up using the 1% mindset!
By year 5, Susi has roughly $4000 more because of her “1% More Mindset”. And in 8 years, she’s got close to $18,000 more. You can see that by adding money and time, the success just explodes in Susi’s favor.
Bottom line? A little extra savings has a huge impact on your financial success. Take advantage of that.
How To Save An Extra 1%
There are laundry lists of ways to save money. The cool thing about this exercise is that you don’t need to do anything drastic. You just have to remain aware. Look for small opportunities and bank that money. Everyone has their own lifestyle and you (and your accountability partner) are the best people to find that little extra savings. If you commit to doing this you’ll find the money.
But an even better approach is to reverse engineer your savings. Take what you are saving every month now and just add 1% to it. Set up a schedule like Susi did and just put that money aside before you spend anything. You’ll find a way to make do. You won’t even feel that 1% spending cut. Then sit back and watch the beauty unfold.
How Powerful A 1% Mindset Is
Here’s what’s going to happen. After a few months you are going to fall in love with yourself again. You’re going to see how successful, determined and capable you are. You are also going to be invigorated, motivated and inspired. As a result, you will probably apply these new-found super powers to other areas of your life. If you can achieve these kinds of impressive results in your financial life, you’ll probably want to use that skill set to improve your health, happiness and other parts of your life.
Having a 1% mindset is your new secret weapon. It doesn’t cost anything. It deals with challenges in small bite-sized pieces. It is measurable and attainable. Oh….and it will transform your life.
Do you have a 1% mindset? If not, are you going to act as if you do for the next 30 days?