The biggest secret to building financial security and wealth is automating your savings.  You too can get rich automatically.

Here are the tricks to getting rich automatically without worrying about the details.  It’s almost hands-free money management.

1.       Put a minimum of 10% of your income into a 401k or similar retirement fund every month straight from your account.  Better yet, put in the maximum amount your employer will match.  Increase your contribution to 20% of your income when you can.  Invest this money in portfolios that are appropriate to your age and risk tolerance.  A financial advisor can help.

2.       If you have any credit card debt or other consumer debt put 20% of your income toward paying the balances down to zero.  Do not use the cards until that is done.  Give yourself a cash allowance each month for necessary expenses.  When the cash is gone, stop spending.

3.       Pay off your full credit card balance every month.  Do not skip a month for any reason.  Carry no consumer debt beyond your house and cars (if you must).  Work toward the day when you are debt free.  Pay off consumer debt first and then pay extra on your mortgage.  Even $100 a month extra can save you tens of thousands of dollars in interest on a typical mortgage.

4.       Put money aside automatically with automatic fund transfers by your bank for major expenses such as taxes, insurance, vacations, wish list items, college, and the like.  A good budget will let you know how much you’ll need.

5.       Live on the difference.  You’ll know you are doing okay if you can pay off your credit card balance every month and you have cash left in your pocket and checking account.  You’ll know there’s a problem when you can’t pay off a credit card balance right away or your bank balance starts dropping instead of going up.  Those are your signals to adjust your budget, your spending and your savings.  Get rich.

I’ve talked to many professional money managers and they all say that their best clients (most money) have all used automatic deduction and automatic savings to build their nest egg.  “After a while we just didn’t miss it,” is the common saying.  See also the Seven Steps to Financial Freedom. 

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