Why living below your means is essential to becoming rich Leave a comment

Living below your means is key to becoming rich. Living below your means making sure that your expenses are much less than what you earn. The general rule is that one should save at least 25% of one’s earnings. From a realistic perspective, the less someone earns the more difficult it is to save 25% much less to save anything. But the key is to save something so that you can start to earn compound returns on something. You must start somewhere, Someone who earns $50,0000 may be able to save $1,000 per year rather than $12,500 per year. But by living below one’s means, then that $1,000 will begin to earn money for him/her also. With a 10% return, that $1,000 will earn $100.00 Then next year, he/she would be able to invest another $1,000 that would also begin earning him/her money. Over time, by living below his/her means, those savings will continue generating additional earnings. That is why Living below your means is key to becoming rich.