Do you think you have to earn a lot of money in order to be wealthy? Certainly, a high salary can help you get there faster but it is not the sole requirement to build your nest egg. Even individuals who are very wealthy follow a routine of living below their means. In fact, most of the wealth of people today is accumulated by hard work coupled with diligent saving. The road to creating your wealth begins with healthy spending habits. Here is how you can start today.
Look Between the Lines
When was the last time you reviewed all bank transactions and every charge on your credit card statement? Making a habit of inspecting these on a regular basis will allow you to uncover any recurrent expenses that you might be able to reduce or eliminate. For example, you may have yearly subscriptions to magazines or services that you no longer utilize. Or if it has been more than six months since you last evaluated your cable service or car insurance, you can call the companies and ask for a better rate. Finally, consider the items you purchase at the grocery store. Do you end up throwing out food? Is your pantry full of expired products? Always make a list of only what you need and don’t deviate from it when you go grocery shopping.
Teach Your Mind New Tricks
Your salary is a constant number but the temptation to overspend on various possessions can affect you at any time. Peer pressure of owning the latest gadgets or fashion trends can be a major instigator to ruin your savings plans. However, you can adopt and practice some rules of thumb when it comes to spending in order to reduce overindulging. Such decision making shortcuts, also known as “heuristics,” can simplify your life and help you indulge less. One example of good heuristics is setting a dollar limit you spend on items you purchase regularly. When buying a purse, don’t pay more than $50 or opt to get that summer outfit for the same price instead. Another good habit is to skip that weekend trip to the mall altogether. If you don’t go, your wallet won’t become a victim of the latest sales. Finally, if budgeting every single dollar of your salary is too overwhelming, you can start by setting a reasonable limit for your impulse monthly purchases.
Baby Steps to Success
If you have not invested into a retirement account yet, do it yesterday. And if you have, commit to contributing $50 more per month. As an example, $50 a month in a retirement fund with 7% rate will become over $55,000 in 30 years. Reducing your insurance bills by having your policy evaluated every 6 months, canceling unused subscriptions and services, and avoiding Starbucks every once in a while are some easy ways to save that extra money. Practice makes better. The more you follow your good saving habits, the better you will feel, and the more motivated you will be to continue on the road to building your wealth.
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