There are two ways to start your income snowball:
- Save more money
- Make more money
That’s it. The money you invest to grow the snowball has to come from somewhere.
I love saving money. There is some weird enjoyment I get about seeing how much money I can save each month.
But saving money from your day job will only go so far.
Say you take home $3,000 per month. By cutting all your expenses and living on a tight budget you’re able to save 50% of that.
Saving $1,500 per month is fantastic! If you don’t feel a little pain from how much you’re saving, you’re not saving enough.
Invest that $1,500 into an income snowball that grows at a rate of 7% and you’ll be a millionaire in about 23 years. That’s awesome!
With a 3% dividend rate, your million dollar snowball is making an income of $30,000 per year. Fantastic!
Now imagine you were able to invest an extra $100 per month. Now you’re a millionaire in 22 years.
How about an extra $500 per month? You’re hitting the million mark in 20 years.
What about an extra $1,000 per month? Say you’re now investing $2,500 per month.
18 years! That’s all it would take to have a million dollars. If you started right out of college, you’re a millionaire before the age of 40!
You may already see the problem with this situation, though.
How could anyone possibly squeeze another $1,000 per month in savings out of a $1,500 a month budget?
You were already saving 50% of your income and now you’ve got to find a way to save over 80%. That makes living more than just a little painful.
Renting an apartment is going to cost more than $500 per month. Roommates are fine in your twenties, but your future partner might not be too keen on the idea in your 30s.
So, what if that extra money didn’t have to come out of your paycheck? What if you were able to earn an extra $1,000 per month some other way?
What if that extra $1,000 came from our second option?
How to Earn More Money
It’s having your cake and eating it too!
You don’t have to live on top ramen and you’re still going to be a millionaire in less than 20 years.
Everyone has the ability to earn at least an extra $100 per month.
Here are some resources on how to make more money and start growing your income snowball even faster: