There is an old saying that asks you never to peg the needle on your spending meter. There are a few things that you need to ask yourself when you try to buy something that is bigger, flashier, or newer. Why do you want it? Would it make you happier? Would it give you the status that you are looking for? Would you derive a sense of self-worth from it, the like of which you did not have before? You may not know this, but in the long run, you could be happier that you kept your money in the bank and never indulged in any expense that was unnecessary.
You should only spend if you have a genuine need to do so. It is best to be conservative when it comes to spending habits. You should do this even if your salary increases or you inherit wealth or property from somewhere else.
1. Shopping smartly
People who are successful financially rarely pay the full price for a product they buy or a service that they avail. They are always on the lookout for ways in which they can save money. You should have such a mentality as well. Always be on the lookout for the smart ways in which you can decrease your expenses. Wealthy people have no problem shopping for their daily needs at outlets such as Aldi and Wal-Mart. At the same time, they would also frequent outlets such as Costco to buy gas for cheap. This is also applicable when such people decide to spend money.
2. Never indulge in fancy toys
Are you looking to buy a car? Are you looking for the latest model? Are you sure that an old model would not be just as beneficial for you like the new one? For example, if you are attempting to buy a Mercedes E class car why not buy the 2014 model instead of the 2016 one? You should keep a simple thing in mind. There is no law, which states that if you are a wealthy person, you should have BMWs (Bavaria Motor Works) or Mercedes cars. There is no obligation on you to own a watch that costs you 3000 dollars or a suit that would make you less rich by 5000 dollars.
As far as the USA (United States of America) is concerned 40 per cent of the wealthy people use old cars used by someone else previously. In fact, to your utter surprise, you would find that most millionaires are really conservative when it comes to their expenses. There are plenty of wealthy and happy retirees who drive cars such as Toyota, which is easy to maintain and consume less gas.
3. Pay off your dues
There are many ways in which you can pay off your dues such as mortgages. You can try to pay off the full amount at once without taking recourse to use up your retirement fund. Even if you are unable to do so, it would be better if you made larger payments such as 300 dollars on a monthly basis. These payments may only be a bit bigger than what you are usually required to pay, but they can make some major difference for sure. For example, in a 30-year mortgage, you can save 10 years by following this particular method. Normally retirees who are wealthy and happy tend to get into retirement knowing that they do not have any mortgage left to pay.
At the very least, they are confident that they would be able to pay it off within a small matter of 5 years. As per research done by an agency known as You Can Retire Sooner Than You Think it was found that on an average the price of homes owned by the happiest retirees was 355,000 dollars. This proves that you do not need to live in a mansion to be happy.
4. Save your extra income
Whenever you get that raise or make some extra money from somewhere or the other, there is always a temptation to spend it and buy a new car or go on a vacation for that matter. However, if you are being wise and are serious about retiring rich, you should use this money for necessary expenses. You could use the money to pay your taxes or put it in a brokerage account or your retirement fund. You can be sure that you would get huge returns on such investment later on. As far as the rich retirees are concerned, they see every extra income as the ideal opportunity to add to their wealth rather than indulging in some short-term expense that would only make them happy and do nothing much else.
5. The importance of avoiding the temptation
When you go shopping always leave your credit cards and cash at home in a safe place. Have a list and stick to it. When you do not have a lot of options to spend money, it stops you from overspending and indulging in impulse buys. This tactic would really come in handy when you are visiting Costco or a mall for that matter. T Boone Pickens, a famed energy billionaire, always has a definite shopping list of things he wants to buy and he only carries sufficient cash to buy so many goods only. There are some other things that you can do in this regard as well.
Sell off all the junk that you have accumulated at your home. Look at areas of your home such as a basement, tool shed, and garage. Sell off anything that you may no longer have any use for. The best way to do this is a yard sale. However, if you cannot do so, donate all that to a charity and get some tax write off. That would help you save money as well.
Apart from this, you should also invest for a long period. Be in it for the long haul.