How to Get Rich by Saving Money

Can Saving Money Help You Become Wealthy?

Small, consistent savings grow over time. And with smart investing and compound interest, your savings can help you build wealth. The key is thinking long-term and being committed to your financial success!

Written By Tiffany Woodfield, Financial Coach, TEP®, CRPC®, CIM®

Steps to Take to Create Wealth by Saving

These are a few simple steps you can take to get started building wealth by saving money:

• Be mindful and accountable for your spending patterns
• Create a goal to work towards
• Understand your current financial situation
• Eliminate debt
• Track your spending

Can Saving Money Really Help You Get Rich?

One of my favorite stories is of Joseph Leek, who was not considered to be a wealthy man but rather a miser.

He wore secondhand clothes, watched television at his neighbor’s house because he wanted to save on electricity, and lived in a rundown house.

It wasn’t until the 90-year-old died that his daughters learned of his wealth when he donated nearly $1.8 million to guide dogs for the blind. He created this wealth by squirreling away money and not spending it.

He was likely driven by a fear of running out of money.

But you don’t need to be on the extreme side to build wealth by saving.

Rather, building wealth is about finding a balance where you can save a certain percentage today for a future goal while still enjoying your life and not being an extreme penny pincher.

Invest in Your Money IQ and EQ

It’s important to invest time in increasing your understanding of money concepts so you can make better financial decisions.

This is your money IQ and includes learning about saving, investing, and ways to earn more money.

Money EQ is your relationship with money. It includes all your deep-rooted emotions, feelings, and beliefs about money. Without investing in understanding and working on your Money IQ and EQ, you are trying to make financial decisions with one hand tied behind your back.

I recommend you read some of my blog posts about money mindset and financial blockages to help you boost your Money EQ.

Top Books to Read If You Want to Increase Your Money Mindset

If you want to improve your money mindset, reading books on the subject is a great start.

A few of my favorite money mindsets books are:

1. Think and Grow Rich, Napoleon Hill
2. The Psychology of Money, Morgan Housel
3. The Power of Your Subconscious Mind, Joseph Murphy
4. The Big Leap, Gay Hendricks

These books discuss the power of your subconscious thoughts and how these thoughts impact all your decisions, including your ability to build wealth.

Q&A

How do you build wealth with savings?

One of the best ways to build wealth with savings is to invest your money to earn passive income and take advantage of compounding interest.

This means investing your money for the long term and allowing it to grow. You want to invest in a balanced and diversified manner to be patient and stay the course.

Once you have achieved an asset level over $1 million, working with an advisor who can help you invest your money and act as a guide to keep you on track to financial freedom can be helpful.

What is the trick to saving money?

The trick to saving money is understanding your current financial situation and how much money comes in and out each month.

Then, determine if you have any surprises, which are areas you didn’t realize you were spending so much on and don’t value. These are the items that are easiest to cut out.

Next, create a goal, a realistic timeline, and a budget to keep you on track.

If possible, automate your savings so you don’t have to think about it or be tempted to spend it. Remember, the trick to saving money is to stay on course and not give up.

How much should I save to build wealth over time?

A good rule of thumb is to spend 50% of your take-home income on needs, 30% on wants, and 20% on savings or debt repayment.

Also, by using a percentage of your income, you should be able to save more as you earn more.

How does compound interest help my savings grow?

Compound interest helps your savings grow because earning interest increases your account’s principal balance.

For example, if you had $100,000 and earned 8% interest using compounding, your new balance would be your earned interest ($100,000* 8% = $80000) and your original deposit for a total of $108,000. If you do this over many years, your wealth will grow.

What’s the difference between saving and investing?

Saving is putting aside money to reach a goal, whereas investing is putting your savings into something with the expectation that you will earn a return over time.

When you save, you can think of it as storing your money under your mattress. Whereas with investing, you take your savings and put them to work.

How can I avoid spending money on things I don’t need?

1. Create a budget and track where every dollar goes.
2. Each month, look at your bank and credit card statements to determine if you have any ongoing fees for services you don’t need.
3. Use cash only
4. Understand what you value spending money on
5. Have a savings goal you are working towards
6. Eliminate temptation by unsubscribing to store emails and limiting social media
7. Pause before every purchase.

Quick Video: 5 Basic Elements of a Budget that Everyone Needs to Know

These five elements of a budget are critical to consider when you’re creating a financial plan that helps you build towards a work-optional lifestyle and financial freedom.

Get the Free Guide and Audio Meditation for Manifesting Your Dreams

Pop your email address in the form below to get my easy checklist and guide to manifesting and the guided audio meditation to help you get started.

You’ll also get one or two emails per month with the latest blog posts about abundance, wealth-building, manifesting, and creating a fulfilling life.

Related Articles

💎 How To Become Rich by Saving Money

💎 How to Change Your Mindset on Making Money

💎 What Is the Best Way of Saving Money?

About the Author