13 Keys to Wealth – How to Spend Less Than You Make
Today I’m discussing 13 Keys to Wealth – How to Spend Less Than You Make. You may or may not know that the key to wealth is spending less than you make. This is really hard for most people, which is why most people aren’t wealthy. So how can we actually do it in our real lives?
Here are 13 Keys to Wealth – How to Spend Less Than You Make.
#1 Leave Your Credit Cards at Home
If I know I don’t need to buy anything in the morning, then I will leave my credit cards at home. I’ve heard that some people put their credit cards in their phones now. If you have difficulty spending less than you make, then you need to take your credit cards out of your phone too.
#2 Only Pay Cash
I did an experiment to only pay cash (CLICK HERE for the experiment results) and the results were amazing. My husband actually spends 176% more with a credit card than with cash.
Many people have told me that with the hassle of having to get the cash and use it they know already that they would spend less money.
It’s also easy to budget with cash. If you can only spend what you have in your wallet for the week, then you stop spending when you run out.
If you stick to cash spending, you will get better at making the cash last all week so that you have enough food and whatever else you need.
#3 Create a Sunny Day Fund or a Cash Reserve
It’s important to have some cash on hand for unexpected expenses. I call this a sunny day fund or a cash reserve. Others like to call it an emergency fund but I don’t want to save for emergencies.
If something comes up, like a wedding in Mexico, you can borrow from your reserve and then pay it back. That’s how you don’t have to use a credit card.
#4 Pay Yourself and Your Family Members to Do Plumbing and Repairs
This has helped us keep our money in our family. My husband just fixed our toilet that can’t flush. I paid him $100 because he made it better than before. We would have paid a plumber more to fix it so I felt like it was a good deal for us.
Obviously you don’t want to pay yourself for little repairs but for major repairs like broken toilets, I think it’s a good idea to pay a family member or even yourself.
#5 Chart Your Income and Expenses
I chart my income and expenses every month. That’s what inspired this blog post. Our expenses have been higher than our income, basically because we took out a loan to fly to the Philippines in February when my mother-in-law died unexpectedly.
We didn’t have enough in our emergency fund to cover the entire cost.
Now our son has unexpected orthodontic costs, and we are negotiating now and planning how to cover the expense.
Unexpected expenses happen.
Tracking Income and Expenses keeps me on track to figure out a solution.
#6 Track Your Spending – find out what your spending weaknesses are
I think our spending weakness is family and friends having weddings and funerals. We will feel the need to go and it is expensive to fly from Hawaii to places like Mexico (for a wedding) and the Philippines (for a funeral).
It’s challenging for us because family and friends are high on our list of values.
#7 Distinguish Between Wants and Needs
Needs are shelter, food and clothing. Other than that, everything is a want. So it’s important to figure out for yourself what you are spending on that is not an actual need, and to stop spending on it.
#8 Understand What Truly Brings Meaning to Your Life with Trial Periods to Evaluate “What Ifs”
You can try “What if I don’t spend any money on coffee?” and see what happens for a week. Do you feel better or worse.
“What if I don’t use the AC for a week?”
“What if I don’t watch tv for a week?”
“What if I don’t buy anything on credit this week?”
This is also a way to get your spouse and family to agree to try spending less.
#9 Learn How to Communicate Effectively With Your Spouse Over Money
With us, my husband used to spend much more money than me. Now he is actually much better, but it used to be alarmingly different.
Since I’m in charge of our finances, every month I ask him how much he owes on his credit card, and we figure out how to pay all the costs.
#10 Watch out for Small Expenses That Add up Over Time
Small expenses like recurring app charges, storage costs for photos, coffee, lunches and snacks – these can really add up to big expenses.
I have no recurring app charges, and I don’t eat out. I bring snacks when I go out and make our meals at home.
#11 Stop Using Credit Cards
At one point I stopped using Credit Cards altogether because I had too much credit card debt. If you have credit card debt, you might want to stop using credit altogether.
#12 Automate Savings
In order to guarantee I spend less than I make, I automate savings and make it a priority. I figure out how to pay for everything else.
#13 Pay Bills Manually (Do Not Automate Them)
I actually do not automate any bills except my personal credit card. I’ve come to find that paying bills manually makes be more aware of money, what I’m spending on, and make me keep them low.
For example, our mortgage increased at the beginning of the year because our home insurance was changed. I figured this out and then I found a better and cheaper home insurance, and replaced it.
You will be able to see these kinds of changes in your bills and stop them if you pay your bills manually. You will also want less bills to give yourself a break, and cut out some costs entirely!