How investing $53 can make you $1 million

It may not be a get-rich-quick scheme but a financial advisor has recommended this easy method to becoming a millionaire.

Let’s just call it like it is, nobody really wants to budget.

But we do want more money, and more than that, the epic lifestyle more money can buy. Unfortunately, it’s not easy …

Our inner saver is hard wired for failure. Every time you spend money on something, whether it’s a new tech toy or lunch out with your mates, you get an immediate pleasure hit.

The alternative is socking money away for some future date that’s potentially unknown.

In the moment, it makes the choice to spend your money instead of saving it an easy one.

But the thing is, how much you save is the biggest driver of how quickly you get ahead with your money. It’s also what makes the difference between true financial success and money mediocrity. And, unless you’re born into big money (and probably even then too) you have to get good at saving and spending at some point in your life.

Get Cashed Up

Created by financial advisor Ben Nash, Cashed Up is a free six-week course to help Aussies, who are dealing with the rising cost of living, get their finances in check. Those who sign up to the budget bootcamp get weekly, step-by-step challenges to improve their financial fitness.

By the end of the six weeks, participants will have set a budget, created a savings plan, learned how to invest, and sorted their superannuation. The interactive course can be started at any time and aims to empower participants to make more informed financial decisions.

How to turn $53 into $1 million

I want to illustrate with an example. In this example you find a way to save $53 each week, then invest into the Australian share market index (what you see on the news at night saying the ‘market’ is up by 1 per cent etc).

You keep at this over time, saving each week and then reinvesting your dividends as they’re received, allowing your investments to bubble away growing through the power of compound interest.

The power of time and money is a beautiful thing.

Based on the long-term return on the Australian share market of 8.8 per cent, your $53 per week would grow to $43,945 in 10 years, $149,552 in 20, $403,343 in 30, and ultimately $1,013,246 in 40 years, making you a millionaire. All for less than the cost of a couple of almond milk lattes each day.

For less than the price of two coffees a day you can set yourself up to be a millionaire in retirement. Picture: Chris Kidd

Worth noting that $53 is not nothing, and for some people this might be difficult or impossible to do based on where they’re at right now. But on the other hand, $53 is just 4.01 per cent of the current Australian average income of $90,329, meaning it should be pretty achievable for most.

But as I mentioned, saving isn’t easy. And for most people, it doesn’t come naturally. But it is achievable if you know how to approach your savings strategy.

After helping thousands of people, I’ve found there are a few key things that drive savings success. The elements are: taking a 50,000-foot view, good prioritisation, and segregation and automation.

Prioritisation

The core of a good savings strategy is prioritisation. We all have priorities – spending on our day-to-day lifestyle, living in a nice house, travelling, or providing for family and loved ones, and saving enough money to create financial security, just to name a few.

Everyone’s priorities are different, and there is no one-size-fits-all approach here – the perfect savings strategy for you depends on your priorities. But most people don’t consciously choose their priorities. They simply ‘do stuff’ with their money, then end up with whatever results they end up with.

Prioritise your expenses so you can start making savings.

50,000-foot view

The first element of savings success is taking a 50,000-foot, high level view of the flows of your money. What income you have coming in, what’s going out, and what’s leftover. To make it easier, you can use the Cashed Up calculator to do this.

You should list everything out, then dive deeper and look at the things you’ve prioritised, making sure that on balance you’re extracting maximum happiness out of the things you’ve prioritised.

Automate your savings

Once you’ve set your spending and savings allocations to deliver maximum happiness based on what’s most important to you, you need a system that will turn your savings plans into savings results.

Here you want to automate your savings strategy to make your money management easy.

Everyone’s situation is a little different and ultimately you need to find an approach that works for you, but you definitely need some sort of system if you want to make things easy.

Multiple bank accounts

I’ve found that using multiple bank accounts, automatic transfers, and using different banks for your day to day spending vs. savings to be highly effective to automate your savings success and get ahead faster.

Don’t get too caught up on the details here, you simply need a starting point. Once you get started it’s much easier to course correct and refine your approach over time, ultimately moving you closer and closer to your version of money success.

The wrap

It won’t just happen on its own, you need to take action. The first step is always the hardest, but once taken you can leverage the momentum you create to make your next steps easier.

If you want to make your first step a little easier, check out news.com.au’s free six week Cashed Up challenge – where you’ll get my top tips and money hacks to make it easy to save more money, then to figure out some smart moves to do with the extra money you have to work with.

Ben Nash is a finance expert, commentator, podcaster, financial advisor, founder of Pivot Wealth and author of the Amazon best-selling book Get Unstuck: Your Guide To Creating A Life Not Limited By Money.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.

Originally published as How investing $53 can make you $1 million