Many people would really like to be rich but find that they are not. It's a shame because it's not that hard.
Most people (that I meet) think in order to increase their wealth they must increase their salary. They are right - but only half right. To build up wealth you need to spend less than you make. Where debt taxes your efforts, savings will pay dividends. If you gather enough savings you could live comfortably off of them without having to lift a finger. You probably already know this, but the trick is how to achieve this. Below I will talk about easy tips on how to spend less. Way less.
Consider that many of us enjoy amenities that would have made Kings and Queens envious 500 years ago. People will borrow money to own big screen TVs that they were happy to live without just 10 years ago. People judge their wealth based on the things they have relative to their peers instead of their financial situation. Many of the luxuries you enjoy are likely not worth the effort it takes to get them.
Below are some examples:
Vehicles. Most people don't need them. Most people think they need them. Including payments, insurance, fuel, and maintenance vehicles typically cost between $25 and $45 per day. If you make $15/hour you keep $12/hour after tax and you need to work roughly 2-4 hours each day (including weekends) to own that vehicle. Are you sure you can't take the bus, bike or carpool? If the bus pass costs $50/month you would save the difference of $700 to 1300 per month.
That's $8400 to $15600 per year. You could take a couple of vacations and go to Europe and Asia each year. You could use your savings and get an Iphone or Blackberry and surf the net or watch movies while on the bus. Folks often associate cars with freedom. Usually they keep you from ever really having the means to be free. Plus they pollute.
Dining out. You can eat fairly balanced meals for about $5/day. Typically unprocessed foods are healthier and cheaper. A single meal at a restaurant can easily cost enough money to feed you for 6 to 10 days. Restaurant food is usually less healthy, rarely tastes as good as home made, and terrifies anyone who has seen what goes on in the back of some restaurants. If you make $15/hour (12 after tax) then you need to work around 2 to 4 hours for one single meal. That's eight hours if you bring a date. Besides, cooking a fancy meal for two will probably score more points with your honey than picking up the check.
If you feel too tired to cook, consider the eight hours at work that are required to pay for your meal.
Interest. Pay off loans before investing (with the exception of RRSPs). Typically loans charge more interest than savings earn. Interest saved on a loan repayment is always a sure thing. Interest earned on investment usually isn't. Also any amount of earnings is worth less than an equal amount of savings because you pay tax on the money you earn but not on the money you save.
Cable TV. You can download almost anything you want to watch and watch it when it on your own schedule.
Telephone. Skype costs $2.95/month. I haven't switched yet as of the typing of this blog but I'm a fool for wasting my time typing this instead of canceling my landline and setting up Skype!
There are thousands of other places to save money but these are the big ones.
I'm not saying you have to live poor. Many of these sacrifices are not nearly as big as they seam and the money saved can go to much better things. The trick is to escape the typical paradigm of things one ought to have and get better acquainted with what you really want and what it will cost you to get it. For many working part time at a place down the street and giving up your car may allow you to work half as much and end up with more cash at the end of the month.
Well - there's my first post I hope it is useful to someone. Feel welcome to leave other suggestions in my comments section.
