Wednesday, May 25, 2016

Things That Will Make You Money - Number 16 - Save Money

Really successful people do things that other people will not do.  One very important thing they do is save money. I was shocked to learn from a Business Week post that:
Just 45 percent of upper-middle-class households (income from $75,000 to $99,999) saved anything in 2012, according to the Fed study. That means the other 55 percent didn’t save for a house, retirement, or education. About 16 percent spent more than they earned and went further into debt.  
The Fed study is called "Supplemental Appendix to the Report on the Economic Well-Being of U.S. Households in 2013."

So we learn form this, even the majority of the upper-middle-class do not save money. Guess what really successful people do and why? That's right they save money or put money aside but how and why?

Powerful Reasons for Saving

Yes really successful people save money but not just to save. They have powerful reasons for saving. Savings do two things for you. One is it gives you money for a rainy day when you income drops or stops for a time. The second it is you the ability to take advantage of opportunities that present themselves.  Yes, it "takes money to make money."  It is true and so to make money you need to save money to have it available for investment/business opportunities.

The really successful people have money that they can invest in business opportunities. Why not you? Why can't you be a successful person who decides where to invest their hard earned money. Yes, you too can create this opportunity for yourself by saving money. And not just saving money but saving money in a vehicle that allows you to easily and quickly access it.

After Tax Investment Accounts

One problem that most people have is they commit too much money to retirement accounts from which they cannot or have difficulty taking money out to invest in a business opportunity.  Now there are ways to use a retirement account for investments but not easily or quickly. By saving money in an investment account, already taxed, you can have quick access to funds to invest or live off of while you start a new business. In a retirement account it is not really possible to use the money to carry you over while you start a business.

Really successful people have after tax money working for them and have some on hand when opportunities present themselves. And what happens as a result? Opportunities come to them and are recognized by them. When a person has no savings they are not even looking for and hence not even seeing investment/business opportunities. But when you have saved money you are looking for things to do with it. You see saving causes you to see things differently and be open to opportunities to put your money to work for you.

If you are already positioned with savings and our looking at business opportunities take a look at my post on things to consider about business opportunities:
10 Things to Consider Before Purchasing a Business

Reserves - Prepared for the Unexpected 

Notice too this point brought out in the Business Week article:

The report highlights the consequences of these hand-to-mouth habits: Only half of these households had enough savings to finance three months of living expenses if they lost their job or couldn’t work. A $400 emergency would force about 20 percent of them into months of debt.
Really successful people are always prepared for the unexpected either good or bad. You should have access to reserves in case something happens to your source of income.  In addition a small emergency should never put you into crisis mode. 

Take charge

Take charge of your financial life.  Start saving today. Make changes in your spending habits today so that you will be in a more powerful position tomorrow. You may need to look at what you spend money on and what you own that you don't need. To succeed you will need to make choices between immediate and long-term gratification. Don't sacrifice your opportunity to develop a powerful financial position for short-term and temporary gratification.

The CPA Superhero wants to help you to succeed in business, life, and in retirement.  While my main business is preparing tax returns, I also work with clients to setup accounting systems to start, manage and develop their business(es) and develop and implement a financial plan. Contact me using my information below to schedule a free introductory consultation up to a half hour. 

Jeff Haywood, CPA

The CPA Superhero

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My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

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