I have a close friend who would probably define at least some version of his “success” as owning a bar on the beach. That’s you Mike P.! Let’s go with that for a second. I did a quick Google search and I found a few options. We are looking at somewhere around $200,000-$600,000 (I know a wide range, but we will go with the $600k). So, we need $600,000 for the beach bar… That’s a big number; where do we start?
Some people will see that big number, get discouraged, and never start. But that’s probably because that was never really their definition of success. But for Mike P., it is.
The first step? Print off a picture of your dream beach bar put it on the mirror in your bathroom, and look at it every single day.
The second step? Open a savings account at a separate bank – online banks pay 1.5%+ as of July 2018.
Third step? Begin saving each paycheck towards that account, consistently, and DO NOT look at it. Pick a number - $100 or $1,000 – just start there. And every few months, increase the number.
Here’s what will happen over time…
You will automatically save and it will be money that is out-of-sight, out-of-mind (like your 401(k) that is so easy to save to) and you won’t touch it. When you see the money grow over time, that should excite you and drive you to try and save more.
After 1 year of saving $200 per month, you will be somewhere around $2,400 – still a long way to go. Next year, increase your savings by $100 per month ($50 per paycheck).
After 2 years, you’re at about $6,160. Keep this going each year increasing your savings by at least $100 per month for the year.
After 5 years, you should have around $25,000 saved up.
After 10 years, over $83,200 saved up. So, before the age of 40, we should start seeing this come to fruition…
Yes, we are still significantly short, however, there are a couple factors that come in to play here…
- This may be all sitting in a savings account and I used a 2% interest rate.
- You may not need to buy the bar in all cash (however, that may be ideal given that you could live off the income the bar produced each month – and potentially a much lower standard of living helps).
- There will be bills that fall off over the next 10 years where you can recapture dollars and ramp up savings quicker than the $1,200 increases I used each month. Think car payments, student loans, credit cards, etc.
- Have you cut the cord (television cord)? Everyone’s doing it! There may be expenses you can cut off earlier and recapture money.
If you start out at $500 per month and increase that to $1,000 per month after 5 years, then maintain $1,000 per month for the next 5 years (same 10 years total), you would be at $125,000+!
There is an infinite number of ways and scenarios we can run, but the key is to see what works for you and then most importantly… DO IT! Your beach bar “success” may be closer than you think!
What lifestyle experiences do you want to make happen in your life? Are you doing something about it today, so it becomes a reality tomorrow? Email me at firstname.lastname@example.org and let’s see how we can get you on the path to your success as soon as possible!