RICH: nearly everyone wants to be it, but few people actually know what they need to do to get it. Becoming rich takes a combination of luck, skill, and patience. To get rich, you’ll need to set yourself on a path that leads to a monetarily enriching career, then handle the money you earn wisely by investing it, saving it, and reducing your living expenses. Getting rich isn’t easy but with a little bit of perseverance and skillful decision making, it’s definitely possible.
Building wealth is about more than just hitting a number. It’s also about cultivating the habits of mind that make saving second nature – or at least a whole lot less painful.
Saving money is a habit – a very good habit. But saving alone will not make you rich. Saving money and then investing that money will make you rich.
So here are 16 money saving tips that can speed you up on the path to financial security –
#1 Become Your Own Chief Financial Officer
You don’t fix what you don’t know, so the first step in money saving tips is becoming completely aware of your finances and where your money is going.
As soon as you start to understand your current situation in detail, you will be able to identify leaks and simple solutions that will help get you on your way.
Nobody cares more about your finances than you do (not even a financial adviser), so it is on you to take control of your financial future and direct it to where you want to go.
#2 Ignore Links That promise Fast Money
There is a little more embarrassing than falling for the online scams that claim you can earn thousands of dollars a month by clicking a link and investing a couple of hundred dollars. Similar to fat diet pills and online gambling, very few ever make a cent, let alone a living.
Becoming rich takes time, patience, and discipline, so instead of investing your hard-earned cash into what adverts call “online deals”, put it in a savings account. You could also learn how to invest in stocks and shares. If you learn the basics, you could slowly generate a moderately good income on the side.
#3 Improve Your Credit Score
Credit is boring and I hate to talk about it, but it does make a difference. Think about it: most of the life’s biggest expenses are purchased on credit. It’s important to start to take care of it now because there is going to be a situation in the future where you’ll wish you had.
Although not all bad, credit cards should be used sparingly. They are great for:
- Building a credit rating
- Cashback rewards
That said, if you don’t have the funds to pay it off, you could end up in serious debt. Make your credit card an emergency card. Do not keep it in your wallet when you go grocery shopping or to the mall.
#4 Don’t Make Financial Decisions After A Rough Day At Work
You save more when you feel powerful, even when it’s for a quirky reason. A recent study in the Journal of Consumer Research found that people who had just answered questions while sitting in a tall chair were more likely to save money than those on a low ottoman. A practical takeaway: consider reserving your major financial chores for “up” days when you are feeling in command, says study co-author Anne-Kathrin Klesse.
#5 Automate Your Money
The key with your finances is to make it as easy as possible for yourself. The best way to do this is to automate your finances as much as possible. What this means is that as soon as money comes in, it is dispersed to your other accounts automatically. For instance, you can set up your finances so that money is taken straight from your paycheck into a retirement investment account, or from your checking account to pay off fixed bills like your internet and cable.
The key reason why this works is not only to free up time, but it helps prevent us from wasting money. If we see extra money in our account, we’ll find a way to spend it and then won’t be left with much money to invest in ourselves and our future. Automation helps keep our priorities in line and takes the emotions out of it.
#6 Cancel unnecessary Subscriptions
We often get lured into paying monthly subscriptions because we feel it would encourage us to use them. Unfortunately, most of the time that’s not true and it’s just another way to eat away at our bank balance. Think about whether or not you really need the subscriptions mentioned below:
- Gym Membership
- Magazine Subscriptions
- Amazon Prime
#7 Make Your Own Tea And Coffee
If you spend $3 to $5 a day on tea or coffee, it’s time to stop. Aside from the mound of sugar you’re probably consuming, you could save up to $35 a week; that’s more than $1,800 a year. Instead, invest in a nice thermos, coffee/tea machine or just higher quality tea/coffee from the supermarket, and make your own at home.
#8 Prepay Your Debts To Save Thousands
If you have loans, you can actually save thousands of dollars each year – by spending more each month.
Let’s say you have a $10,000 student loan, at a 6.8% interest rate and a 10-year repayment period. If you go with the standard monthly payment, you’ll pay around $115/month.
But check out how much you can save per year if you paid just $100 more each month-
|Monthly Payments||Total Interest paid||You Save|
Even prepaying $20 more per month can save you huge amounts of money. If you can prepay even a small amount more per month, the benefits can be significant.
#9 Cut Out 10%
Even the most frugal people can find 10% of their expenses to cut. If you then take 10% and invest it in yourself and in your future via training, paying off debt, or putting it towards investing or starting a business, you’ll be much better off.
Try it. Go through your expenses line by line and see what you can cancel or reduce. I do this practice at least twice per year to keep things in line, and I find hundreds in savings each time.
#10 Negotiate Your Bills
Just because a company quotes you a price doesn’t mean it’s the best one they can offer you. Start by contacting the companies with which you have a regular bill, for example:
- Credit card
If you contact them and explain that you have been offered a better deal elsewhere, they may be able to negotiate a better price for you, especially if you are a long-term, loyal customer. If they can’t offer you a better deal, it may be worth switching providers.
#11 Make Money On The Side
Of course, if you have a full-time job, it can be difficult to find the time to earn spare cash on the side, especially if you have a busy social life or a family. If you can, putting in additional hours alongside your job is a great way to save money. For example, you could:
- Do Some Freelancing consulting
- Find A Weekend Job
- Teach Or Mentor
- Sell Products Online
#12 Minimize Your Taxes
The next money saving tips for getting rich is always be minimizing your tax liability. No matter your income level, you always need to be thinking about how to minimize your taxes. Taxes can prevent you realizing wealth over time because they consistently eat away at your income and investment returns.
There are many actions you can take to minimize your taxes. first, take advantage of tax deferred investment accounts. Max out your 401k or 403b, take advantage of an Individual Retirement Account, leverage a Health Spending Account.
If you don’t want to give up your wealth to the government, then taxes should be near the top of your mind when making any money decision.
#13 Stop Buying Branded Products
Fancy marketing is something we all for. The beautiful packaging and catchy tagline are probably what lure you in, but here is a secret: the product is no different to your supermarket’s own brand version. Aside from the product not being different, the own brand version will cost a fraction of the price.
#14 You Need To Marry Smart
The next money saving tips may sound funny but for building wealth you need to marry smart. Why? Because a great spouse can be a huge force multiplier when it comes to building wealth, while at the same time the biggest destroyer of wealth is divorce. In fact, a recent study found that divorce destroys 75% of personal net worth.
On the building wealth front, a great duo can earn together, accumulate together, and watch their double-earnings compound over time. That’s a huge force multiplier for building wealth. The interest on $2 is always higher than the interest on $1.
#15 Put Your Money to Work For You
The next money saving tips is that you have to put your money to work for you. Earning is your part of the heavy lifting. You need your money and the power of compound interest to work together over time to grow wealth for you.
It means that you need to invest.
You need your money to grow and earn you more money. You need to start building income streams with your money. The goal is that your hard work up front can help you build passive income streams for the future.
#16 Don’t Spend Just To Keep Up With Others
Your personal goals are what should matter to you the most, not what other people are achieving. It can be disheartening to see your neighbor roll in driving a new car every year but remember that as nice as it would be to have one yourself, you don’t need it. Work towards something bigger and better than material possessions and you’ll reap the rewards in the future.
That’s it; 16 small money saving tips or steps that can add up to enormous changes. Saving money is a very difficult task for most, but by following some or all of the suggestions outlined above, you’ll find yourself closer to your financial goals in no time.