Building wealth is something that is on everyone’s mind, however most people assume to build wealth you must earn more. This brings thoughts of taking on a second job, moonlighting after work hours taking away from family time, or getting involved in high risk activities such as day trading or gambling. People tend to overlook simple strategies to building wealth, such as spending less and adjusting overall spending habits by identifying where the family budget money is going, and what portion of that is wasted or unnecessary spending. Below are some tips and suggestions to building wealth over time through reduced spending.
Analyze what your monthly phone expenses are. For example, how much are you paying for your land line, your individual mobile phone plan or family plan. Many times telecom companies have packages or bundles that will reduce your overall costs. Also, determine if you really need a land line phone. Many families can get away with only having mobile phones instead of land lines, which will reduce overall costs. (Potential Annual Savings: ~$720.00)
Insurance is usually an overlooked item that people determine is a necessity, fund insurance policies, and forget about them. Insurance is insurance, meaning you are paying to protect yourself or your tangible items in case of unexpected events. Families should not waste unnecessary expenses by overpaying for insurance policies. Hundreds or even thousands of dollars can be saved by simply shopping around and comparing insurance policy prices. This should be done for home, auto, and life insurance policies. Grouping policies together with a single insurance agency can also provide lucrative discounts. (Potential Annual Savings: ~$500)
Grocery shopping can easily be a families second most expensive budget item behind housing costs. By shopping for generic brands, you can save 20-40% off of the price of a similar name brand product. Assuming a typical family grocery budget of $500 per month, that can be a significant reduction in overall yearly expenses. (Potential Annual Savings: ~$1200)
By using only these simple steps to spending less, you can potentially realize an annual savings of ~$2420.00. Add this up over a 60 year lifetime of just being aware of these three expense items would save you $145,200.00. Assume you invest that money each year over a 60 year life span with a measly 5% annual return. Your savings would accumulate to just under $1 million dollars ($943,659.86 to be exact!) As you can see, building wealth over time can be a function of spending less, instead of the all too typical “need to earn more” mentality.