You’re likely to be familiar with the term ‘living within your means’. However, more and more people are living on, or even above their means, rather than within them. Generally, wealth accumulation starts with savings. What you can put aside from your pay builds up and you use this to buy property, shares and other assets. Living from pay to pay without setting money aside to build your wealth leads you to stagnate financially which eventually culminates in retirement on the pension. If this situation sounds like yours, you have two options – give up or try harder. Giving up is pretty easy, just grab a bottle of wine or a beer, close your eyes and dream of something better. Alternatively, cut up the credit card, grab a bank statement and get to work implementing the below ideas so you can move forward and grow your wealth.
Eliminate access to money
It’s easy to eat too much chocolate when you’ve got cupboards full of it – so just don’t have it in the house. Money is the same, and it’s easier than ever to get access to it. EFTPOS, credit cards, PayPal, online shopping – on the commute home, you can buy a new outfit, book a holiday and rent a movie. Cancel the credit card, shut down PayPal and make it harder to spend money. If it’s not there, you can’t spend it.
Have visibility of your bank balance
You wouldn’t drive around in a car that doesn’t have a fuel gauge or speedometer, so why go about your day to day activities without knowing what’s in the bank? This is one of the easiest ways of making sure you’re not spending money you can’t afford. Make sure you log into your bank regularly or check the balance when using the ATM.
Automate your savings
Get your payroll to transfer a separate amount of money into another account each pay. If you’re paying off debt, make this an additional payment that you make above the minimum repayment. If it goes out of your pay without you seeing it, there is less chance that you’re going to spend it.
Avoid automating your expenditure
It’s so easy to commit to small regular costs such as Netflix. However over the long run, having multiple regular expenses really adds up. Resist the temptation and always calculate what something is going to cost you on a yearly basis before committing.
Understand the difference between a necessity and a luxury
Living standards are higher than ever, and things which were a luxury just years ago are becoming the norm. However, many people buying the finer things in life are probably not getting ahead either. So stick to the basics, and if you ever feel like you’re missing out, know that what’s really happening is that everyone else is missing out on growing their financial future instead.
Set some goals
It’s easier to train for a marathon than it is just to start running. If you set some goals that are realistic, it can make it much easier to achieve them. Even better, find a way to make yourself accountable so that you can’t make excuses for yourself.