How to Build Wealth – $1,000,000 – with Automatic Investing (Part 2)

Oct 18

Image sourced by Felipe Furtado @furtado

Welcome Back!

If you’ve been following Budget and Grow Rich® for any period of time, you know that I got divorced in 2007. It was Horrible.

By now though, you’re probably tired of hearing about this story; but please stick with me. I think you’ll see the relevancy in a moment or two.

While my eX and I weren’t a good match and divorce was the right move, I was lost!

Thankfully, we have three amazing children who are fantastic people and on a mission to save the world! Any way you slice it, parenthood is a rich experience I wouldn’t trade for the world!

My hefty Child Support obligation ended in 2020 when my son Mike V. turned 21 – when he became emancipated under New York State Law.

That freed up a Lot of Money every month!

Putting aside that I was required to pay Child Support, it was very important to me to help provide for my children. But when my obligation lapsed, that was a relief.

During the years following the divorce, I had higher expenses – Child Support and ‘add-on expenses’ – and some debt I had to pay off. So my vacations were few and far between and relatively sparse at that.

After the payments stopped, I could have lived high on the hog or higher on the hog.

With the increased cash flow in hand, in my heart I really wanted to embark on ‘The Great European Vacation’. I was eager to make up for lost time and give myself a treat or two. . .

After all, I deserved it. Wouldn’t you?

Instead, I opted for balance – a mix of some relatively modest vacations, saving for retirement and establishing an emergency fund. Not quite as fun as Europe or the Caribbean but much better for replenishing my savings, saving for retirement and maximizing lifetime wealth.

Here’s how I saved $1,000,000 and You can too!

As the famous saying goes, "How do you eat an elephant? One bite at a time."

By breaking down your target savings amount, target wealth amount or financial goal into bite-sized pieces, you take the pressure off and substantially increase the likelihood that you will achieve your goal and win the prize – having enough money to cover your living expenses for your entire lifetime.

Here’s another powerful moneysaving and wealth-building technique that I use to save over $12,000 Every Year, which brings me closer to my $1,000,000 goal:

For purposes of this blog post, let’s assume my Child Support payments were $1,000 every month.
Since I received two paychecks every month – on the 15th and the last day of the month – I divided the $1,000 monthly savings from the Child Support payment in half: $500 and $500.

This tactic matches cash inflows and cash outflows; and smoothes out my cash flow throughout the month.

In this example, each pay period You could save and invest $500; spend the $500 on discretionary spending; or save and invest a portion and spend a portion of it, for example half and half or some other split.

Typically, the most productive use of the money would be to pay down debt or invest for your future.

Me? I had $500 to spend or save and invest twice a month. And that’s exactly what I do – save and invest - $1,000 per month - $500 multiplied by two!

Let’s dive into actionable steps You can take to save and invest for your future and potentially build wealth of $1,000,000.

Step 1: Start an Automatic Investing Program

One of the most powerful ways to save money and build a solid net worth is to set up an automatic investment program.

If you happened to miss Part 1 of this series, you can check it out here.

Here's how you can do the same:

Allocate a Set Amount Money: Choose an amount you can save each payday. Whether it’s $25, $100, $500 or $1,000, start with what’s comfortable. Gradually increase your savings amount over time.
Prioritize Savings: Treat your savings like a bill—non-negotiable. Save first, spend later. Or Never.
Create a Purpose: Set clear financial goals, whether saving for retirement, a house, a car or a vacation (to enjoy and recharge). When your financial goal or purpose is meaningful to you, it’s much more likely that you will take the steps you need to make your financial plan work, stick with your financial plan and achieve your financial goals.

Step 2: Save and Invest Consistently

Set Aside a Specific Amount of Money to Save and Invest Every Month or every pay period (payday) – $25, $50, $100, $500, $1,000 or more – an amount You can afford. And ideally a bit more.

Every dollar counts!

The Key is to Get Started. You can increase your investment amount further as you go.

Make saving and investing and paying down debt a top priority, Ahead of or Equal to paying your rent or paying your mortgage, utilities and putting food on the table. Although we are not suggesting that you starve yourself or go on austerity unless you have to.

The Key Questions for You:

What is your highest financial priority or highest financial priorities?
How can you free up cash flow to reduce debt, save more money and invest more money?
How will you allocate your paychecks?
How much money will you direct to savings and investment and/or debt reduction?
What are your best action steps to help you achieve your financial goals and objectives?

In the next Budget and Grow Rich® blog post in this series, we’ll deliver more moneysaving tips and wealth-building techniques to help you accumulate $1,000,000.

To Create More Free Cash, click here.

Let’s get to it. See you next week,

Arthur V.

Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!