How to save money
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How to save Money:

By Darren Barr-Engstrom  

Financial Facts “worth” knowing:

If you’ve think “I’m just bad with money”, and you’ve resigned yourself to living with it, then it’s time to shake yourself up!  Some people are naturally better with money than other people, however you can learn about personal finances and improve your relationship with money. 

If you think that winning the lottery will solve all your problems, you might be surprised to find that 80% of all lottery winners in the United States file for bankruptcy within 5 years. (Jack Canfield, Success Principles)

A majority of balance sheet millionaires (those with a net worth over a million dollars) do not play the lottery or buy scratch tickets, and didn’t even do so in the years before they became millionaires. (Thomas Stanley, The Millionaire Mind)

Put some numbers on your vision that you created a few minutes ago.  How much are you saving each month?  How much are you donating each month?  How much are you earning each month?  How much are you spending each month?  How much will the lifestyle that you vision for yourself cost you? Want more money? 

The best and easiest way to make more money is to spend less money.

If you spend $3 on a coffee, that’s $3 that you will never see again, and $3 that does nothing to build your wealth or get you to financial independence.  For every dollar that you don’t spend, that’s a dollar that you keep in your pocket.  If you were to eliminate $5000 of expenditures, you would keep 100% of that money and have an extra $5000 in your pocket. Eliminating expenses reaps more dollar rewards than simply making more money. The reason is that for every dollar more that you earn, you get taxed on it.  So for example, if you earn an extra $5000 in income and are in the 25% tax bracket, you lose $1250 to taxes.  So the $5000 is really only $3750 after taxes. This makes the $5000 in cutting back on expenditures, as opposed to trying to make that extra money at work, look that much more rewarding!

Where are you being unconscious about spending money day to day? 

Do you go on auto-pilot to buy that cup of coffee because you have to get your coffee fix in the morning?  Do you take money out of another bank’s ATM and figure the fee is “only” a couple of bucks?

If you ever find yourself at the end of the week or month asking yourself “Where did all my money go?” then this homework is for you! Get yourself a pad of paper or a notebook, and for the next week track everything you spend money on for the week by writing it in your notebook.  Be ruthless! No miscellaneous categories. Don’t let anything slip past your radar: write down everything, even the $1 pack of gum. 

If you find yourself in the “it’s only a few dollars” mindset, take a look at this:

It’s sometimes easy to justify a purchase when it’s small or we’re only thinking about how much we’re spending in the moment.   If you were to add up the cost of a $3 coffee at Starbucks, 3 days a week, that’s $12 each week or $48 per month for a few cups of coffee.  Each year you would spend over $576.  (What would you do with an extra $500?) In 10 years 3 coffees a week adds up to $5760 and over 40 years over $23,000.

Digg!  

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