This blog deals mainly with investment but as everyone knows, in order to be able to invest, it takes money. And to have money you have to save. In this article we will see how to save $1000 per month by having a completely normal salary.
How to save as much as an expert
I deliver below the 3 essential elements:
I. Establish a balance sheet of all your expenses
Get started by drawing up a full balance sheet of their current expenses. If you don’t know where and how far your money is spent, you won’t know how to stop the bleeding. I knew people who ate every day at the restaurant thinking that spending $25 every lunch five days a week had little impact on their finances. They also bought twice a day of coffees at $2. At the end of the month it made more than $300 of expenses dispensable. You will see immediately these $300 appear if you simply take the time to make a balance sheet.
It is possible in many cases to arrive at a winning compromise that will be cheaper and improve your well being (a simple example: preparing in advance your own food will be cheaper and healthier than eating every day at the restaurant).
II. Reduce all current expenses
Do you think a gift of $50 that you give once a year to your mother or girlfriend will destroy all of your savings plan? Of course not. It is not the exceptional expenses that will ruin your long-term budget, it is your current expenses, such as overpriced restaurants every lunch time, excessive phone plans that you have to pay monthly, $100 of stuff you buy or spend each week.
In practice, there are generally only 3 large recurring and vital expenditure items: rent, food, and insurance. By minimizing these expenditure each month, i.e. choosing to live in a place that is not above its means, by intelligently managing your food budget (and that does not mean buying bad quality, today we can eat organic food for very little money), and by taking only the insurances that are directly useful for you, you already reduce considerably the amount of your current expenses.
The phone and internet can be considered almost negligible if you choose a reasonable package, health and clothing expenses are non-recurring, and the choice of having a car or not is yours (as is choosing a expensive or economical car).
III. Change your mindset and apply frugality to everyday life
Being frugal means we don’t need the last watch or the last mobile phone to be happy. It is a fundamentally anti-consumerist mode of thinking. To be frugal is to achieve the realization that, 80% of the things being sold as fundamentally indispensable to our happiness serve us for nothing.
Once you have understood that every dollar saved can work for you instead of you working for him, it will be much less difficult to give up this new car or this new watch that makes you eager (and that will not provide you more satisfaction after a month).
Remember that your most valuable resource in life is not money, it’s time. So stop swapping the fruit of your working time against useless items. When you see every dollar saved as a small employee who will work for you and give you time, you will no longer see frugality as a sacrifice, but as a liberation.
This article is not intended to present the three examples cited as models to be followed absolutely (if you have children for example, your vital spending posts will probably be a little different, you will have to add education, tuition, etc. …), however, they constitute, I think, a good example of what can be accomplished.
Too many people tell me that saving $1000 a month when you have an average salary is science fiction. And it happened to me several times, when I mentioned this possibility in the course of a conversation, to have had in return some mocking remarks telling me that I had no sense of reality. I hope this article proves the opposite and will have opened your eyes to what can be done.
Never forget: You control your expenses and not the other way around.
And if you decide to take up the challenge, that you set the goal of saving $1000 each month but you don’t succeed, the worst case is to finish the year with $6000 savings instead of the targeted $12,000.
So what do you have to lose?
If this article interested you, I have also written an 8-step guide to help you put more money aside that picks up and develops some of the above concepts.