After several months of reading and writing about self-made millionaires, I picked up a few money-saving and wealth-building habits along the way.
One such habit, from “Mr. Money Mustache” — who saved two-thirds of his take-home pay to retire comfortably at age 30 — particularly resonated with me: He thinks about money as something to invest rather than something to spend.
“So if I run into a surplus sometime, I don’t think of something to buy with it, I think, ‘OK, I better get rid of this money and put it to work again.’ So, I sweep it out of the bank account and into regular index funds.”
It’s a very subtle, yet effective, mindset shift I’ve gradually adopted since hearing about it.
It means that any raise, bonus, or birthday check goes straight towards my Roth IRA, savings goals, or other investments. To resist the temptation to spend any surplus money I receive, I’ll deposit it right away, so I never even see it.
Not only am I not spending this money, but more significantly, I’m putting it to work and allowing it to compound over time.
When it comes to compound interest, just a little bit can go a long way — assuming a 5% return, saving $19 a day starting at age 25 would make you a millionaire at age 65, according to calculations by Business Insider’s Andy Kiersz based on a chart by David Bach.
While it’s difficult to quantify exactly how much money I’ll save thanks to Mr. Money Mustache’s habit, it’s bound to add up over time.