Focus on financial liberation: Begin with Savings in Mind

Part 6 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Before I start this blog, I want to make sure you know what an Investorgetic® is. An Investorgetic® is a persona I created while writing Money Intelligence to counter the Consumerholic persona in our society. It's a term I coined that's made up of 2 words: investor and energetic. It means someone who is passionate about investing to build their wealth in a sustainable way. 

Think you can’t save? Think again

There’s no secret formula to saving money. People who save don’t belong to an exclusive club. Anyone can do it. So the question is, what’s stopping you?

Saving money is the ability to understand the difference between essential and non-essential expenses. It’s the ability to budget, sacrifice unnecessary luxuries and commit to a long-term financial strategy. It’s about being in control of your money every single day.

Best of all, the more you do it, the easier saving money becomes.

What do you want and what do you need?

Take a close look at what you spend your money on. Is it vital that you start every day with a takeaway coffee? You may think you can’t function without it, but is this honestly true?

What about clothes? Take a stocktake of your wardrobe. How many clothes do you actually wear? Do you really need to buy a new outfit every month or two?

Too often, we confuse what we want for what we need. We complain about the essentials (rent/mortgage, food, car, insurance, electricity), yet we are quick to whip out our credit cards to pay for indulgences (weekends away, shoes, movie tickets, dinners out).

A $5 coffee each weekday may seem trivial, but it adds up: $25 a week, $100 a month, $1200 a year. This figure rises substantially if you also buy your lunch every day. Imagine the money you could save by not doing this!

Think like an Investorgetic® and look at the big picture. Saying no to takeaway coffees and packing your own lunch means you can easily pay an extra $55 a week on your home loan. This can reduce your home loan period from 30 years to 25 years! I must admit I cannot go without my coffee but I save by bringing my lunch to work. The take out lunch savings help me service the shortfall on an investment property (no kidding! Join me at my next Money Intelligence seminar to find out how).

What other expenses can you cut back for long-term financial gain?

Stop worrying about what others think

In our Consumerholic society, we’re encouraged to spend as much as possible on things we don’t need. We’re pressured to keep up with the latest trends and technology. And if we try to be prudent, we’re criticised as being “stingy” or a Scrooge.

Remember, it’s your financial future that’s at stake: you cannot afford to throw your money around simply to please everyone else.

Here are some easy-to-implement money habits that will help save you money:

1. Have a household budget and review it every year.

2. Know how much your monthly household expenses are.

3. Pay your bills on time to avoid late-payment fees.

4. Have a budget for the family’s clothes and shoes for the year.

5. Restrict eating out to a maximum of twice a week.

6. Budget and save for family holidays and non-essential expenses, rather than paying for them with your high-interest credit card.

7. Make more than the minimum repayments on your mortgage to pay it off earlier.

8. Go shopping with a list and stick to it.

9. Buy household supplies and groceries in bulk.

10. Never buy from telemarketers!

Being money wise doesn’t mean life has to be boring. It also doesn’t mean you can’t buy things that truly give you pleasure. The key is to prioritise what you need and the things that truly matter to you.

How you can start saving now

A good rule of thumb is to set aside 10% of your income each year. So if your after-tax income is $50,000 a year, this equates to about $416 a month. 

If this seems too much, start smaller. All it takes is $50 a week. Place this into an interest-bearing account you can’t touch. After a couple of months, try building on it. Increase the amount you set aside by $10 a week, every two months. Watch your savings grow!

Next week in the Investorgetic® series, we will look at why building your wealth is not enough. It’s essential that your assets, health and family have adequate protection. 

Susan Wahhab