Over the past few years, there have been a lot of books published that claim to unlock the secrets to becoming a millionaire. But according to self-made millionaire David Bach, getting rich boils down to one simple formula that anyone can apply in their own lives.
CNBC notes that in Bach’s book titled “The Automatic Millionaire,” the financial author said that a person should save the equivalent of one hour’s worth of income every day.
“If you’re not saving that much of your income right now, you are working too much for others and not enough for yourself,” said Bach.
To find out how many hours you’re working for yourself, fill in the blanks of Bach’s formula.
“Last week, I worked a total of _____ hours. I earn $____ an hour (before taxes). Last week, I put aside $_____ for my retirement. So last week, I worked ______ hours for myself.”
Bach said that to figure out how many hours you worked for yourself last week, you need to know how much money you saved for yourself last week. If the total is zero, then you worked zero hours for yourself last week.
However, if you managed to save some money last week, divide the amount by your hourly income. Bach said that one hour’s income is roughly 10% of one’s gross income.
“Most people work less than one hour a week for themselves,” said the author. “And that’s not nearly enough.”
In his blog, Bach says that most people would work about 2,000 hours this year and that many Americans will spend 90,000 hours of their lifetime doing their jobs. Bach said that people should definitely get the freedom they deserve after all their efforts and those long hours in the workplace.
The financial guru said that if there’s one thing people should do in 2017, they should pay themselves automatically first and that this should be a daily habit. Bach said that if you work from 9 a.m. to 5 p.m., the first hour should be yours to keep.
Bach suggests putting the money in a retirement account where it will grow over time. The financial author says that by doing this, 2017 could be “your best year ever.”
For more personal finance tips, check out Jobs & Hire’s report on the simple ways to save money in 2017.
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