Saving ability is the first skill that you should acquire if your goal is to trigger passive rents that allow you to generate more money in order to have more free time at least by keeping the income constant if not increasing it.
To be honest the steps are: Pay off all the debts that depress our cashflow first of all, then save.
I was convinced that knowing how to save was equivalent to not spending, in fact my concept of saving has translated for years into the imperative “saving as much as possible by limiting to 0 the expenses that I consider superfluous!” and, to be honest, turning off the taps constantly on unnecessary expenses (without missing anything essential, including holidays every year) has produced its results.
In fact, I managed to put aside a fair amount clearly compared to the income received.
This saving technique is not exactly a textbook and can be improved and I will explain how below.
In fact I realized that the rich have a different concept of savings than mine, saving in fact does not mean putting away as much as possible throughout the month but rather budgeting the expenses and deciding the monthly quota that will be saved.
For example, if I decide to save 1,000 $ per month, I have to set aside this sum at the beginning of the month, as soon as I receive the salary, perhaps by moving it to a savings account, an accumulation plan or whatever, but those 1,000 $ are dedicated savings and should not be considered, we can spent only the remaining part.
It is clear that in order to set up a correct and effective savings action, it is necessary to be disciplined, to know how much the ordinary administration costs are and to know how to budget in advance, in this way it will be easy to identify the portion that can be saved monthly.
It is not easy nor satisfying to constantly dedicate oneself to this boring and repeated activity that consists in recording any expense made by classifying it by category item (there are apps on the smartphone that facilitate this task) but essential to regulate our expenses.
In addition to this we should dedicate ourselves monthly, or at least every four months / semester, to do the calculation of how much we have spent, adding private expenses to those for the house, the car, food, entertainment etc … so as to have a complete picture and then divide for the number of months, to understand the average of the monthly issues.
If you live alone this activity will be simpler, if you have a family it is clear that you will be responsible for your expenses, more difficult it is to involve a partner in such reasoning (if you do not share your goal). In the latter case, something will get out of your control, but at least driving someone’s “family expenses car”, who can point out that you are spending too much, for example.
In summary, the rich save by budgeting expenses and defining before what to save, they behave with the family budget as if they were managing a small company.
Now, if this austerity condition is too painful for you, you are not obliged to pursue it !, but everything has a price !; if I want to buy assets I have to save, and for saving money you need discipline sacrifice and become competent in the investments you want to make.
I leave you with a statement by an American billionaire Frank Cardone who, among the various points listed by him, who make up the ingredients of the recipe to become millionaires, underlines well one: “Stay at green”, essentially forced to save everything you can :-).
Good savings!! 😉