build-wealth-through-savings

How To Build Wealth Through Saving

Each year Forbes produces a list of the Richest People In America. Reviewing this list proves that there isn’t just one secret to becoming wealthy, the sources of wealth for the people on this list are incredibly diverse.  One characteristic that everyone on the Forbes list shares is passion. Each person listed was either passionate about the product or service that made them wealthy or passionate about money itself. Individuals who want to achieve wealth should learn to love and collect money as if it were a hobby such as collecting stamps or antiques. Ever heard the old adage that rich people are cheap? These people keep and expand their wealth by refusing to spend it frivolously.

Don’t Spend Money Helping Others Get Rich

  • Paying interest on debt helps the finance company get rich and costs the debtor money. Refinance existing debt to reduce interest rates, but ensure the interest savings will exceed the fees to refinance.
  • Save money to spend money. Don’t throw away money paying interest to a bank by financing purchases. Save money and purchase the items with cash instead of financing them.
  • As existing debt is paid off, transfer the money for that payment into a savings account each month and maintain the existing budget and lifestyle.

Live Below Your Means

As a society, Americans are excessive. We own more stuff than we need, drive cars we can’t afford, and purchase homes with more space than necessary.

  • Live below your means by selling off items that serve no purpose (other than to look nice), that were bought for a purpose but hasn’t been used in years, or is being held for sentimental purposes only (it is the memory that is cherished, not the item).
  • Drive cars past their payoff. Drive them until they can no longer get from point A to point B.
  • Avoid the mistake of purchasing a home larger than needed just because it is affordable. If there are rooms in a home that will be unused 360 out of 365 days a year, the house is larger than necessary. Place the money saved with a smaller mortgage payment into savings.

Avoid Unnecessary Shopping

  • Impulse purchases make retailers rich and cause most Americans to spend more than necessary. Impulse purchases can be avoided by implementing the 24 rule, which requires that individuals must wait at least 24 hours before making the purchase. Unless the item was needed or still as strongly desired at the end of the waiting period, the item should not be purchased.
  • Do not open store credit cards. Although the cards will save money on the purchase, it will cause people to make unnecessary purchases simply for the savings. Follow the wise advice of these sayings: “Don’t go broke saving money” and “It’s not saving if it wasn’t something you had to purchase anyhow”.
  • If the urge to shop is unbearable, shop but don’t buy. This should only be implemented by those with enough willpower to follow through with it. This tactic allows the individual to go online or look through a catalog, shop for items, place them in their virtual cart, and then close out of the application or throw away the catalog without actually checking out. This can provide the emotional satisfaction of shopping without actually spending any money.

Shop Smart

  • Prior to shopping for necessary purchases, conduct thorough research. Conduct price comparisons between competitors and know the store’s policy on price matching. Use Consumer Reports to find out when to purchase specific items based on pricing trends.
  • Once the decision to purchase has been made, negotiate on price. It is customary in America to negotiate on large purchases such as homes and cars, but money can be saved by negotiating on small purchases as well.
  • Finally, buy used or thrift. Thrift stores, consignment stores, Ebay, Craigslist, etc. are all resources in which a person can find items they are looking for that are used, in good condition, and cost a fraction of the retail price.

The truth is, all of these tips are irrelevant if a person spends the money they save. Place the savings gained by using these tactics into an account that will allow your money to grow.

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