Many Frugal Confessions readers are well on their way or have all ready arrived at financial independence. Bravo to you! Stick around because we can use your useful insight over the next few weeks. However, I have a feeling that there are many readers lurking about that have not exactly caught onto the frugal mindset. Perhaps they don’t see its merit, or maybe they just don’t know where or how to start owning more of their paycheck.
There is no secret to saving money: earn money, spend less than what you earn, then deposit the savings. Yet so many people fumble along the way, evident by our national personal savings rate of 5.5%. Perhaps your cost of living is too high, you don’t make enough income for the lifestyle you lead, large expenses creep up for which you are not prepared for or are underinsured for, you have crippling student loan debt, etc. All of these obstacles and distractions exist to keep your money out of your bank account, and to keep you in the same financial situation for life.
I’d like you break out of that financial situation, wherever you may be. Starting on Monday, I will begin a series of posts over the next several weeks called Save Beyond Your Means. These posts will all focus on helping you to increase the amount of money you put into your saving account, thus increasing your financial independence.
Increasing your personal saving rate is not all about “do this, do that, stop spending here”; it’s really about changing your mindset as well. This series will focus on both: changing your thought process towards money, working, and your paycheck, as well as discuss tips and ideas on how to own more of your paycheck.
To get you started, I’d like to give you a rudimentary principle to think about through the weekend. In order to increase your savings, you must widen the gap between your earnings and your expenditures. There are three ways to do this:
- Earn more money while warding off lifestyle inflation
- Spend less money
- A combination of the two
These are foolproof methods; however, not a single one of these will work if the money does not physically make it from your paycheck to your savings account…and stay there. This means that for you to increase your savings, you need to be an active participant. All three components to the saving equation are verbs that require action from you: you need to earn money, you need to spend money wisely, and you need to deposit the savings. It’s all up to you.
The series will begin with the story of my own personal finance journey to show you a bit more about myself, my background, and how I went from having $36,000 in student loan debt to enjoying a positive net worth less than 5 years later.
Please join me next week, and bring your friends!
Save Beyond Your Means Series: