Recently read a pretty good article on personal finance, titled Achieving Financial Success Without Extreme Frugality or a Huge Income by Trent Hamm (link here).
- Critically question every purchase, think about whether it really brings value to your life. If it doesn’t, think about how the spending can be cut down (e.g. store brand, rent, borrow, etc.)
Examples of Areas for Improvement
- Spending on things you don’t notice
- Cut down your spending on the “background” things that you don’t really notice (e.g. store brand household items, insurance package, moving closer to work)
- Spending on treats that are no longer treats
- If you keep eating at restaurants or having Starbucks every day, you get less enjoyment out of these as they have become routine.
- Quote: “… life is actually much more enjoyable if you make your “normal” routine as inexpensive as possible and then spice it with treats with enough intervals in between so that they really feel like treats.”
- Eating out
- Learn to cook and eat more at home
- Wasting food
- Use what’s in your fridge first, those are “freebies”
- Spontaneous purchases
- Plan your purchases in advance (e.g. know what you are going to buy, how much to spend, where to buy) so that you are not caught up in the moment and end up making spontaneous purchases.
- Accumulating stuff
- Many times busy people end up accumulating things related to their interests but never get around to actually reading/doing/using it.
- Schedule blocks of time to do your hobby, and the desire to accumulate would go away.
- Making wrong decisions
- Don’t allow yourself a chance to talk yourself out of doing the right thing or procrastinate
- Automate paying down debt, paying of bills, and transfers to savings/investments accounts
- Treating your job as a chore
- Your job is an opportunity. Use the time to maximize what you can earn from your career.
- At worst, the time you are spending in your job is an exchange for financial security and the ability to do what you want in other areas of life.