Todd Polke says forget the 10% savings rule. Start by cutting just 1% of what you spend, then invest that small amount. As your confidence grows, you can save more and build real wealth over time.
Now, one of the common dogmas that I hear in terms of saving money and investing is that, well, what you should do is you should save 10% of your income. Now, some people go, Todd, you don't understand, the cost of living is high and, you know, inflation is this, interest rates, I can't save just 10%. My response to them is this: no problem, start with 1%. Everyone can save 1%, no doubt about it. Find a way to live on 1% less than what you're currently spending. And guess what? Now you've got the liquidity. Now you've got enough capital to begin investing. So we've got to start with small amounts and build it up over time. From there, it's just about starting to invest in small, manageable ways as you begin to build up your experience and your confidence when it actually comes to building wealth and creating the habit of wealth.
