How to spend less than you earn
The secret to financial freedom is really no secret at all and you probably have heard it a million times; spend less than you earn. Easier said than done right? In this economy where credit is easily obtained and patience is a lost virtue it becomes more and more difficult to stay within a budget. In this economy there are generally two types of people:
- A frugalist. Someone that will spend most of their time looking for the next best deal or bargain.
- A capitalist. Someone who spends most of their time looking for the next great money making opportunity.
- If you can't stay within a budget and find yourself falling deeper into debt here are some tips on how to spend less than you earn.
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Tip #1: Get rid of your credit cards
This is the easiest way to accumulate debt and spend more money than you know you have in your bank account. Creditors, credit card companies, and stores with "store" credit thrive on individuals that buy on credit. Most know that you won't be able to pay off the balance each month and will end up paying ridiculous finance charges and interest rates. If you can learn how to save your money you will eventually never need a credit card; not even for an emergency. Do yourself a huge favor and get rid of your credit cards.
Tip #2: Look for the bargains
You might not know this but you should never pay full price for anything. If you're shopping for clothes then go to the clearance rack first and look for the items on sale. Shop at stores like Ross, or Costco that carry clothes at a significantly lower price than other stores. Or better yet, try finding a used clothes store. Some people are ashamed of buying used items, but there is no shame in saving money. Try looking online in the classified ads and other used item web sites.
Tip #3: Make a grocery list and use coupons
Before you go out shopping make a list of everything you need and stick to it. Making a list causes you to create a reasonable budget so you usually know that everything on the list you can afford. As opposed to just going to the store and grabbing what looks good. If you get coupons then use them. They can save you a ton of money at the check out line. And you might also want to remember to eat before you go grocery shopping.
Tip #4: Use the 30-day rule
If you happen to be at the store and see something you think you just can't live without wait on it. Go home and contemplate the purchase. After thirty days you think you still need it or want it then go back and buy it. Waiting thirty days can also give you the time to save the cash instead of buying it on credit.
Tip #5: Pay yourself
Set a goal to try and save at least 10% of your gross income. Open a savings account that isn't connected to your checking account and start putting away some money.
Figuring out how to spend less than you earn will give you more money in your pocket and give you peace of mind. So figure what will help you make a change and then just do it.
