Money habits can make or break your financial future.
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This simple habit can have an outsized impact on your ability to accumulate wealth over time. The premise is straightforward — before you pay any bills, or expenses or make other purchases, “pay yourself first” by automatically setting aside a percentage of your income into savings and investments.
Why it works:
- Forces you to save consistently, building wealth through compound growth
- Takes advantage of ‘payroll deductions’ for automatic saving
- Reduces temptation to spend the money on discretionary purchases
- Can start small (10%) and then increase savings rate as finances allow
Evidence it works:
- A study by BMO Harris Bank found that people who use automatic savings accumulate 7x more retirement savings than non-automatic savers.
- According to a report by Fidelity Investments, savers who contribute 10–15% of their income have on average over $500,000 more at retirement compared to those who only contribute 6%.
Takeaway: Make paying yourself first a top priority by setting up automatic transfers from your paycheck into investment accounts. Even small amounts add up over time.
Relying on a single source of income from your job makes you vulnerable to unexpected layoffs or salary cuts. By developing multiple streams of income, you diversify your cash flow and increase your financial resilience.
Why it works
- Protects against loss of a job or primary salary
- Creates more opportunities to earn and save money
- Enables greater income growth as streams develop
- Allows you to take smart risks knowing you have a backup
Evidence it works:
- A study by the Bureau of Labor Statistics found that people with multiple sources of income experience lower rates of job displacement and suffer smaller income losses…
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