Most, if not all people dream about living financially independence and be able to do whatever they want with their nice amount of wealth. Unfortunately, only a few select who can truly achieve that. One of the main keys that will make or break in wealth building is your spending habits.
Also, guess what – you don’t need a large amount of income to be financially independence – good money management can leave you millions of dollar when you retire – enough to fund your retirement to the beach!
Obviously, bad spending habits won’t get you far with your financial planning. Fortunately, spending habits can be transformed if you have the discipline and willingness to watch your spending closely.
To help you out, here are 5 tips to help you transform your daily lifestyle for a better financial planning:
1. Less driving, more walking and riding bicycle.
You might laugh at this idea, but you will become healthier financially and physically. Your savings from gasoline and parking fees alone can be as much as a few thousand dollars a year – think about it.
2. Make and bring your own coffee and sandwiches.
When commuting for work or for fun, stop stopping by and buying those coffee from your favourite coffee shop. A Starbucks coffee can cost equal to more than 5 cups of homemade coffees. Plus, don’t underestimate your coffee-making ability! The right coffee can easily make you a better tasting coffee than Starbucks’ and the likes. The same thing also applies to sandwiches and other easy-to-prepare-at-home food and snacks.
3. Eat at home more often.
In many cases, eating out is one of the major items in your personal finance’s expense column. Eat at home has many benefits – you can save (a lot of) money while improving in your cooking skills – you can even becoming a better cook than those at restaurants!
4. Leave your credit cards at home (or cut them out altogether!)
If you are an impulse shopper who owns multiple credit cards, it’s better to leave your credit cards at home. This is probably against what credit cards are supposedly beneficial for – easy to carry around – but such convenience means it’s easier for you to buy and shop more than you should; this could lead you to a new, devastating problem: credit card debt. You should bring your credit cards whenever you are going to buy something – this will allow you a few seconds to think whether you need the stuff you are going to buy or not. Better yet, cut your credit cards into one to avoid late fees and excessive spending.
5. Going frugal is the way to go.
Well, you should spend on things you really need. When there’s a better substitute, why not go for it? E.g. if your hobby is reading books, you should visit public library instead of buying new books from bookstores – those new titles you want might be available soon at your local public library! Alternatively, if you really want that new book, try shopping on eBay or Amazon to buy used book – chances are, the book condition is still 90-99% at a much lower price tag.
Those 5 ways are great if you can make them your habits – along the way, you should find more ways to ‘fix’ your bad spending habits, and before you know it, you suddenly left a healthy amount of money in your bank. Your next step – investing.
Congratulations – you are one step closer to be financially independent.