Financial advisor who makes Aussies millionaires reveals his secrets #NewsUnitedStates

In my experience of helping tens of thousands of people with their money, saving is an area that is truly nailed by fewer than 1 per cent of the population. The other 99 per cent must struggle so much harder to achieve their financial position.

Saving money is the lead domino that drives every investment decision you make on the path to becoming a Virgin Millionaire. I can’t overstate the importance of nailing this crucial area of your money.

But you should be aware that what’s required will depend on which Smart Money Stage you’re at.

Here is a rundown of the five stages so you can grow your wealth.

How can I build my savings foundation?

At the Foundations stage, you’re trying to build early traction and momentum, so having tight control of your spending will help you progress faster and kick-start your Virgin Millionaire momentum.

Focus on building good habits around your spending behaviour, as they will make your life a whole lot easier at each of the stages that follow.

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Look to pare back any spending you don’t feel is crucial so you can save more and focus on how you can increase your income.

Short-term income boosts will help you hit the targets that will enable you to enter the next stage, but given you still have a way to go on your Virgin Millionaire journey, you should also be thinking longer term.

Often the longer-term shifts in your income will be larger and have a greater impact, whether you decide to further your education, set yourself up for promotion and career progression, or switch industries or careers.

How can I build my savings focus?

At the Focus stage, your biggest saving and investment goal is to purchase your first investment property and the more you can save, the faster you’ll get there.

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Following on from the Foundations stage, you should maintain strict control over your spending to keep savings strong.

If you cut out things at the Foundations stage that are important to you, you might consider reintroducing them now, so long as you can do so without seriously compromising your progress.

At this stage, increasing your income should still be on your radar so you can increase savings and accelerate progress.

How can I optimise my savings?

Once you land at the Optimise stage, you will have put in the work to create momentum and consistency around saving and investing.

It’s important to keep the momentum building, but you can start to think about finding more balance between saving and spending.

If there are things important to you from a lifestyle perspective, give this some attention now.

By this point, you will have solid investments in both shares and property that are building and growing for you, which should relieve some of the early pressure on your savings rate.

As you work through this stage, you will likely increase your spending until it is closer to your planned ideal lifestyle spending.

Increasing your spending should feel good, but in terms of smart money freedom, there are a few downsides to keep in mind.

First, spending will slow your rate of savings.

Second, it will increase your smart money freedom target number because you now need to support a higher level of spending in the future, so you will need more money in investments to achieve this higher income.

While these are negatives in terms of your financial progress, they are positives in terms of your lifestyle. Balance is key here.

Don’t fall into the trap of thinking that because you have more money to spend, having a good saving system isn’t as important here as it was in the past.

How can I accelerate my savings?

At this stage, you should be able to comfortably cover everything that’s important to you.

As at the previous stage, as you increase your spending to cover your ideal lifestyle, you will increase your targets at the same time as you slow down your rate of saving.

By the time you graduate from the Accelerate stage, you should be at a 10/10 satisfaction level with your spending and your saving rate.

But you will still need to think carefully about what your ideal lifestyle looks like and how much money you’ll need to fund it.

You’re getting closer and closer to smart money freedom and the last thing you want is to realise you’ve missed something and have to go back a step.

As at the Optimise stage, the risk here is that you’ll start running fast and loose with your controls around spending and saving and lose clarity. This would be a costly mistake.

How can I make the biggest impact with my savings?

At this point, you should already be at your ideal level of spending and be able to do pretty much whatever you want.

This might include tapping out from regular structured employment for a pay cheque.

But keep in mind that once you turn off your income tap, you won’t be adding to your investments at the rate you have been, which will make keeping on top of your spending and saving even more crucial than at any other stage.

The good news is that you will have built some serious skills and good habits around your planning, spending and saving, so your focus will be on maintaining what you’ve achieved rather than starting something new.

Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. Ben’s new book, Virgin Millionaire; the step-by-step guide to your first million and beyond is out now on Amazon Audiobook.

If you want to review your existing mortgage and see how much money you can save, you can use our free mortgage comparison tool here.

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.