Day 18: Four Ways This Will Become Easier

Four Ways This Will Become Easier

Beginning a savings scheme can feel really hard. It can feel like running through wet concrete. It can feel like trying to hold on to fast-running water. It can feel hopeless.

This will get easier. As long as you stick at it, there are at least four factors that will help you get there.

#1 This will become a habit

Good habits are hard to start. It’s why more people smoke than run. It’s why more people gamble than save. You aren’t one of those people any more. Once you’ve tucked a month of saving seven dollars a day into your savings, you’ll have an extra $210 and you’ll know you can do this. You can now make it part of who you are. Once you have developed a strong habit, it can become harder to drop it than to keep it going. Aim for that, and it will become much, much easier.

#2 You will get moral support

Once you’ve developed the habit of saving, you will find other people doing the same, and realise you need to ignore people who don’t. You can tell people about becoming a seven dollar millionaire (because most people don’t know). You can join saving groups online. You can start posting your favourite savings tricks online (try it on the Seven Dollar Millionaire facebook site), and see how many people like it, or suggest something similar. You’re part of a community now.

#3 More income

The chances are that right now, you are making the least amount of money you will ever make. The last few years have been rough for workers, particularly low-earnings workers, as many of their incomes have not grown as fast as the rest of the economy. This should change over time, and as you grow older, you should earn more. You’ll be older, you’ll have more skills, and hopefully you will have learnt how to translate that into higher income.

There’s no point pretending that this happens for everyone, because it doesn’t, but if you look for it and work for it, it should happen for you, and that should make it easier to save more money, if you have already developed the habit of saving. That’s why number one on this list came first!

#4 Compounding

The power of compounding is treated as though it’s the world’s only real source of magic by people who believe in it and ignored by everyone else. The people who ignore it generally do so because compounding takes a long time to work, but once it gets working it becomes more and more powerful. Over time, as long as you have saved and invested, compounding will make becoming a seven dollar millionaire more and more achievable.

Let’s discuss how it happens again.

Saving $7 a day puts $2,555 in your bank every year.
Investing that to get 7% returns will turn ten years of savings into a bit more than $35,000 by the end of the first decade.
7% returns will then double roughly every 10 years so that $35,000 will turn into:
- $70,000 after 20 years
- $140,000 after 30 years
- $280,000 after 40 years
- And $560,000 after 50 years.

You will still be doing the same thing as before, investing to get 7% returns, but instead of doubling from $35,000 to $70,000 as it does between years 10 and 20, it doubles from $280,000 to $560,000 between years 40 and 50. You’re doing the same thing but you make $280,000 instead of $35,000.

This will get easier. If you develop the habit, get some moral support, make a bit more money and take advantage of compounding, the path to a million dollars can feel a lot more straightforward over time.