Every Dollar Counts
Overview: There are countless ways for people in today's modern society to save money. Many of the ways are hiding in plain sight.
This isn’t really an investing post, except to say that doing these things will be a huge investment in your future finances. If you are having trouble living on half, or even getting to 20% on your retirement savings, give some of these ideas a try. I hope others will chime in with their ideas, too.
Every dollar counts.
Here are some ways to help add to those dollars:
Earn a high income.
Don’t settle for a low paying job. Always seek opportunities to move up. Come in early, go home late, be a good employee, and work hard. Give your boss a reason to pick you for the next promotion.
Don't grow into your income.
I tell this to guys I fly with. Every year that you get a raise, you can spend it or save it. If you don’t grow into your income, you automatically increase your savings rate. If you’ve lived for years on less, you’ve proven you can do it for several more years if need be.
Save 20% for retirement prior to any other spending.
Paycheck deduction works wonders. Out of sight, out of mind, automatically. The next thing you know, you’ll have a lot saved up.
Max out all your retirement accounts.
Before you consider yourself "rich" based on your income, make sure you are maxing out your retirement accounts. Buy your toys with the money that is left over.
Contribute to an IRA.
Remember that you can never earn too much
to miss out on the Roth IRA.
Make use of an employer 401(k) match.
Sign up for this as soon as you have a job that offers it. Use a target date retirement index fund as your investment option.
Don't time the market.
Only rookie investors worry that the market is "at all time highs" (hint: it almost always is) or wonder when the next correction is coming. Instead, simply invest each month and ignore the market.
Never buy whole life insurance.
Ever. Buy term life and disability insurance instead. When you are financially independent, drop those two as well. There is a reason Dave Ramsey calls whole life policies "The payday loan of the middle class."
Don't buy an expensive house.
Unless you live on the coasts, don’t spend more than 2x your annual salary on a home. Realize that a house is not an investment, it's a luxury item, so spend accordingly and cautiously.
Pay extra on the mortgage.
Even just $50-$100 a month extra will save you thousands of dollars over the life of the loan.
Free shipping is a myth.
That ship sailed many moons ago, so don't be duped.
It’s cheaper to keep her.
Don’t get divorced. Splitting your assets in half will get you nowhere fast.
"All hat and no cattle”.
Let this Texas saying guide you. Don't be a spendthrift or your friends will mock you behind your back.
Guard your spending.
"You become a millionaire by NOT spending the $1 million that you could have spent." Read that twice and let it sink in.
High income ≠ wealth.
Remember the Millionaire Next Door quote. You aren’t really wealthy until you’ve saved properly. A doctor making $400k/yr that has $800k in debt isn’t wealthy.
Credit cards are for convenience, not credit.
Are you using them for credit? Cut them up and use cash, or at minimum, use a debit card. Imagine a world where people aren't mastered by a card.
Use automatic bill pay.
Set it on autopilot. Keep things simple. The more you automate, the more likely it is you will save. Out of sight, out of mind. Don’t pay late fees. Stay on top of bills and get organized. Mint
combined with your online banking are great for this.
Keep taxes and investment expenses low.
Your investment fees will KILL you unnecessarily. This isn’t 1975 anymore. Your fees should be less than 0.25%.
Have a will or trust or both.
Use a will if you have financial assets and use a trust if you have a lot of property. Without future planning, your heirs will have a lot to deal with. Skipping a will or trust will be costly.
Keep your spouse in the loop.
Make sure your spouse knows where the money is and how to manage it if you become The Departed
Invest in yourself.
Get educated on investing so you can easily do it yourself. No one will care for your own money as well as you will. Not using an "advisor" will save you hundreds of thousands over 50 years.
Don't buy new cars.
"Where else can you take $40,000 and set it on fire
seven years later?"
Buy off brands/store brands.
Many off brand cosmetics, groceries, toiletries, OTC medicines, etc have the same ingredients as their name brand counterparts for much less.
Raise your insurance deductibles.
Higher deductibles mean lower rates for home and auto insurance. Plan on covering your higher deductible with an emergency fund.
Don't buy retail or pay retail prices.
Shop for deals.
When you do shop retail, pay for a Costco membership. Don't be too good to shop at Walmart. You can buy whole food like items without the WholeFoods markup.
Don't eat out.
If you do, order water. Skip the dessert menu and instead stop at Dairy Queen on the way home.
Be a big tipper.
Being generous has a way of coming back to reward you.
Pay cash for cars.
Can't afford it? Keep saving.
If it flies, floats, or flirts, rent it.
Don't keep up with the Joneses.
The Joneses are broke. Be at peace with your situation and don't worry if you don't seem as wealthy as your neighbors. "People gauge their wellbeing relative to those around them." You don't have to.
It's not a competition.
Saving for retirement isn’t a competition between you and your friends, family and neighbors. It’s a contest between your current self and your future self.
Don't compare yourself to others.
“Comparison is the thief of joy” – T. Roosevelt.
Don't be too shy to ask for a better price.
“That’s not good enough”
Don’t be afraid to say “That’s not good enough” when asking for a deal from a cable company, phone carrier, electronics salesman, at the dealership, and the like.
Remember that the poor man pays twice.
Be smart and buy right the first time.
Stay married to that person. A wise spouse can keep you on the right financial track, earn a high income, raise smart kids, and more.
Cancel the cable.
Cut the landline phone.
Check out your local library.
Don't drink so much.
Beer or Coke is addictive, fattening, and expensive.
Skip the tech upgrades.
Using last year's Apple watch or Samsung phone is just fine. Upgrading your tech every year is like throwing money in the trash.
Pass on going to the cinema.
Instead of $15 tickets and $20 popcorn, make use of the flat screen TV that is already ubiquitous in American homes.
Use pre-paid mobile service.
I use Cricket
on AT&T's network. Stay at home or in WiFi a lot? Use Google Voice
Use public schools.
Send your kids to public or charter K-12 schools and in-state community or state universities.
Use a 529 plan.
Start saving in that plan before you are even pregnant. Make yourself the beneficiary and then transfer the funds into the child's name once they have a social security number to ramp up your savings.
Save for big ticket items that you know are coming: weddings, houses, braces, cars, vacations, Christmas gifts. Use a high yield savings account or taxable account to keep your money growing.
Delay social security.
By delaying until 70, you'll come out ahead financially.
Suck it up and start using a budget. Mint
Buy groceries online.
Even Walmart has free pickup
so you can order everything online when you aren't tempted to overspend. At minimum, eat prior to grocery shopping.
You can have more than one 401(k)!!
Does your spouse have an Etsy shop or do you moonlight as a home inspector? Open up a Solo 401(k) yesterday.
Don't work for the man.
You never get really wealthy as a W-2 employee. Be your own boss and start a company. And since you can have multiple 401(k)'s, start several businesses!
Do your own lawn service
(duh!). Come on, TLF'ers.
Don't use a financial advisor.
In this day and age, with the internet at your fingertips, there just isn't the need to use one and pay high fees.
Shop at GoodWill.
I'm not too good for it. Several of my "Sunday best" shirts are from GoodWill.
You'll be a blessing and receive a blessing. Donate money in front of your kids and be an example to them. If not donating money, then have them help you serve in a soup kitchen.
Spend money on experiences, not things.
So many studies have shown that we are happier when we buy experiences instead of things. I love things. I love things made of melanite and polymer that go bang. But as much as I love things, the shine eventually wears off, whereas good memories of a fun vacation last a lifetime. I fondly remember Disney World as a kid, Paris with my wife, and the zoo visits with my kids, but I couldn't tell you what I got for my 35th birthday. If you really want the "pleasure" of your money to go farther, spend it on experiences and memories instead of more things.
Finally, I know I've written a lot about money and the pursuit of being a wise steward with your money. The main reason to be astute with your money comes from the idea that none of it is really yours anyway. All that we have has been given to us for a short while. How well will you handle the money that's been given to you during the time it's yours?
Remember, a truly rich person doesn't always have a lot of money - life isn't about acquiring more money; being wealthy has a lot of different meanings. Some of the richest people in the world have very little money. Meanwhile: "others are so poor, all they have is money."