Even though I’ve been working since my early 20’s, I’ve never been a big saver. My childhood programming led me to believe that one day, somehow, substantial check from one of my amazing and brilliant ideas would materialize and solve all of my years of financial negligence, hence no need to safe anything along the way. Twenty years down the line and the check still hasn’t arrived.
I have some 25-30 years before hitting my retirement age. I have a feeling that now is my very last chance to implement lifestyle changes that would save me from ending up in a poor house. Along the way, I can also impact my life in a positive way => less consumer spending = less crap that I don’t need and that usually ends up in a landslide.
To introduce long-lasting change into my financial life, I needed to look critically at my spending. This self-imposed analysis helped me to come up with an action plan, which I could apply right away, without having to wait for my finances to change dramatically.
- Find a job that pays more than my current one. An obvious solution but to do so, I need to re-train, which I’m currently doing (I’m at the age where I need to have plan B). However, re-training takes time, which means that I need to put in the hours, the time and be patient while waiting for my re-training to pay off.
- Keep on finding creative ways to spend less and cultivate the frugal state of mind. Even if I change careers or take the two-career path and my earnings increase, I’ll need to be able to stop myself from overspending. If I keep on spending all I’m earning, or worst more than I’m earning, the best plan won’t work.
- Sell out all the extra things I keep around the house (in my house and my parents’ house) that are of no use to me. (I recently went through piles of clothing. So much money was spent on clothes that were hardly used. What was I thinking?!?!)
- Any extra money and income are going to my investment account (currently I’m with Vanguard. Check out J.L. Collins if you want to find out more about Vanguard.)
- Keep on building my emergency stash and holiday stash (I need to go on holiday and it’s essential to my well-being so I’m not scrapping holidays from my life).
- Know exactly how much money is going out of my account monthly and where it is going. See, if I can find cheaper alternatives (I’m looking into cutting my phone bill, it isn’t massive but if I can cut it in half, over a year I would save at least £84)
- In, which areas of my life I can add some extra savings. Can I?
- Be a conscious shopper. Since I started thinking about my savings and investments, I stopped mindlessly putting everything in my shopping trolley. I check the pricing first, and if it’s too expensive for its worth, I look for alternatives. This practice works. For instance, instead of getting £5 ice cream, I get the £2 ice cream, which is equally good. I also started practising buying whatever I can (long shelf-life) in bulk.
I know that for some people my actions may not seem that big, but over time everything adds up substantially. Let’s say that I can cut my food-shopping bill down by £200 a month (£2400 a year), this is where my holiday money comes from or my extra savings or investment money comes from.
These are just savings from food shopping. What if I was to introduce savings in every single area of my life. I’m not talking about depriving myself of everything. If I feel like grabbing this amazingly delicious coffee at the Greenwich Market, I go for it. Of course, my cuts and savings exclude all the children related activities. I’m not making any cuts on their education.
Re-shaping spending habits is crucial on the way to financial independence and stability. Small actions, small changes lead to wealth accumulation over time, and the pressure to have this one colossal break shouldn’t ruin anyone’s life or spoil their retirement.
I know that our current world on steroids doesn’t reward patience and long-term vision, with media coverage and instant fame. But if anyone of us wants to retire in comfort or retire early, less spending and accumulation of less crap we don’t need is the way out.
Disclaimer
I’m not affiliated with J.L. Collins, neither Vanguard.
J. L. Collins is a financial blogger and author of one of the best books about finances I’ve read I follow, and he recommends Vanguard Index Funds for investments and savings.
However, before you do anything with your money, do your own research.