When you think of financial independence, you probably think about people who got rich starting a business, or saved every dime and never had any fun.
Truth be told: There is a way to enjoy your pumpkin spice latte and avocado toast – and still retire early. Take Grant Sabatier. A practicing Buddhist and millennial, Sabatier had a paltry $2.26 in his bank account (plus $20,000 in credit card debt) when he was 24. Yet, in only five years, he grew his pennies to more than $1.25 million. Through his website, Millennial Money, and recent book, Financial Freedom: A Proven Path to All the Money You’ll Ever Need, he now shares his wisdom with the universe.
While Sabatier’s book is primarily focused on how to achieve FIRE (Financial Independence, Retire Early), he also offers up tips for growing your money.
Whether you’re aspiring to be part of the work optional set, or want to bulk up your savings account, here are 6 ways you can build your wealth:
It’s about your daily habits
Your daily habits are key to building wealth. The average person spends 2,000 hours a year working and earning money. Yet, all it takes, according to Sabatier, is about five minutes a day to manage your money.
And, when this becomes a part of your daily routine, it’s much easier to control your emotions and get comfortable with risk. This, in turn, will help you make better money decisions.
“While it might take some time to build a new habit, the lifetime impact of small daily decisions and habits can be massive,” says Sabatier.
For instance, something as small as checking the balance of your bank account through a bank app each day can help keep your finances in good shape.
Other quick and easy things you can do each day? You can see how much you spent yesterday and how much you’ve spent this month. You can also keep tabs on how much you’ve earned from all your income streams to determine if you’re on track with your savings goals. You can also check your credit card and bank accounts to make sure you aren’t dinged with fees and there’s no suspicious activity. (If you’re a Chime Bank member, you’ll never be hit with fees. Never ever.)
Maximize the potential of income, savings, and expenses
If you want to grow your money quickly, you should consider maximizing your three “levers:” income, savings, and expenses.
For example, if you cut back on your living expenses and earn more at the same time, you’ll have more money to save and invest.
Skip the budget
Most people find budgeting to be tedious, time-consuming, and hard to maintain. To this end, Sabatier says budgets that make you feel deprived and guilty about your spending habits can backfire. Instead, he recommends focusing on lowering your top three major expenses instead — housing, food, and transportation.
You can reasonably boost your savings rate by 25% (savings rate equals the percentage of your income you’re saving) by finding a cheaper place to live, getting roommates, or saving on transportation by buying a used car. You can also save money on food by growing your own veggies, bartering with your neighbors, or bulking grocery staples in bulk.
Focus on the future value of a purchase
That $20,000 you spent on a new car will cost you more than just $20,000. As Sabatier explains, if your hourly wage at your day job breaks down to $20 an hour, that car not only costs you 1,000 hours of your time, but also the future value of that money should you invest it. Using this calculator, if you earn an average of a seven percent return (compounded daily) on that $20,000, in 10 years you’ll have $40,272.35. In 20 years you’ll have a cool $81,093.11.
Combine and maximize ways to make money
Sabatier lists four major ways to earn a buck: working for someone else at a full-time job; side hustling; entrepreneurship; and investing. And, if you combine different ways to make money, you’ll earn money faster while you have a fall-back income stream.
For instance, if you have a day job and also a side hustle, and you get laid off, you still can depend on your side hustle. If you have a day job, you can also “hack the 9 to 5” by making the most of your benefits, such as getting the full employer match on your 401(k) or asking for what you are truly worth.
Here’s another example: If own your own business but also invest in real estate, you’ll have your investments to fall back on if your business has a few slow months.
Automation is just the beginning
While “setting it and forgetting it” doesn’t take a lot of effort, automating your savings is just the beginning. Sabatier points out that in order to boost the amount you save to fast-track your wealth, you’ll need to put in the work to bump that savings amount from five percent to 10 percent, or from $100 to $200 a month. This takes serious work and dedication.
If you don’t have a ton to start with, start small and go from there. It’s helpful to break up your savings goals to see how much you’ll need to save monthly, weekly, or daily. For instance, if you want to save $5,000 in six months, you’ll need to save about $834 a month, $195 per week, or $28 a day.
Make the most of your time
As you learned from Sabatier’s tips here, we all have the potential to make more money. And, by adopting an enterprise mindset, you can build wealth even faster than you thought possible. Ready to jump in?
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.